SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





xANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
fiscal year ended: December 31, 2008


OR





 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934





For the
transition period from __________ to __________





Commission
File No. 000-30563





DELTA
MUTUAL, INC.


(Exact
name of Registrant as Specified in Its Charter)





Delaware
                        
                        14-1818394(State
      or other jurisdiction of
                        
                        (I.R.S.
      EmployerIncorporation
      or organization)
                        
                        Identification
      No.)





14301
      North 87th
      Street, #310, Scottsdale, AZ
                85260(Address
      of principal executive offices)
                (Zip
      Code)





Registrant’s
Telephone Number, Including Area Code:  (480)
221-1989





Securities
registered pursuant to Section 12(b) of the Act:  None





Securities
registered pursuant to Section 12(g) of the Act:  Common Stock, $.0001
par value per share





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.   Yes   ̈   No
x





Indicate
by checkmark if the registrant is not required to file reports to Section 13 or
15(d)Of the Act.    ̈
Yes  x
No





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities  Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   x  Yes     ̈  No





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  (Check
One):





Large accelerated filer ̈
            Accelerated
      filer   ̈Non-accelerated
      filer ̈
            Smaller reporting
      companyx(Do
      not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   ̈  Yes    
x  No





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates  as of the last business day of the registrant’s most
recently completed second fiscal quarter was $6,418,941.




Number of
shares of Common Stock outstanding as of April 6, 2009:
221,849,158.


Documents
incorporated by reference:  None








TABLE OF
CONTENTS





PART
      I
              1Item
      1. Business.
              1Item
      1A. Risk Factors.
              5Item
      1B. Unresolved Staff Comments.
              8Item
      2. Properties.
              8Item
      4. Submission of Matters to a Vote of Security Holders.
              8PART
      II
              9Item
      5. Market for Registrant's Common Equity, Related Shareholder Matters and
      Issuer Purchases of Equity Securities.
              9Item
      6. Selected Financial Data.
              9Item
      7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations.
              10Item
      7A. Quantitative and Qualitative Disclosures About Market
      Risk.
              13Item
      8. Financial Statements and Supplementary Data.
              15Item
      9. Changes In and Disagreements With Accountants on Accounting and
      Financial Disclosure.
              44Item
      9A (T). Controls and Procedures.
              44Item
      9B. Other Information.
              44PART
      III
              45Item
      10. Directors, Executive Officers, and Corporate
    Governance.
              45Item
      11. Executive Compensation.
              46Item
      12. Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters.
              50Item
      13. Certain Relationships and Related Transactions, and Director
      Independence.
              50Item
      14.  Principal Accountant Fees and Services
              51Item
      15. Exhibits and Financial Statement Schedules.
              52SIGNATURES
              57


ii


PART
I





NOTE
REGARDING FORWARD LOOKING STATEMENTS


CAUTIONARY
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS


OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995





This
Annual Report contains historical information as well as forward- looking
statements. Statements looking forward in time are included in this
Annual Report pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown
risks and uncertainties that may cause our actual results in future periods
to be materially different from any future performance suggested herein. We wish
to caution readers that in addition to the important factors described elsewhere
in this Form 10-K, the following forward-looking statements, among others,
sometimes have affected, and in the future could affect, our actual results
and could cause our actual consolidated results during 2009, and beyond, to differ
materially from those expressed in any forward-looking statements made by or on
our behalf.





Forward-looking
statements include, but are not limited to, statements under the
following headings; (i) "Business Plan," about the development of certain
projects and business opportunities and the Company's attempts to convert
these plans and opportunities into operating businesses that generate revenues
and profits; (ii) "Business Plan," about the intentions of the Company to fund
its businesses and operations by borrowings and the successful placement of debt
and equity financings; (iii) "Results of Operations"; (iv) "Liquidity and
Capital Resources," about the Company's plan to raise additional capital; and (v)
"Liquidity and Capital Resources," about the contingent nature of the consummation
of any agreements with its contracting and joint venture parties.




Item
1. Business.





Unless
the context otherwise requires, the terms "the Company," "we," "our" and "us"
refers to Delta Mutual, Inc., and, as the context requires, its consolidated
subsidiaries.





Background





We were
incorporated under the name Delta Mutual, Inc. on November 17, 1999, in the State of
Delaware with the purpose of providing mortgage services through the Internet.
In 2003, we established business operations focused on providing environmental
and construction technologies and services to specific geographic reporting
segments in the Far East, the Middle East, and the United States.





Effective
March 4, 2008, we entered into a Membership Interest Purchase Agreement,
pursuant to which we acquired from  Egani, Inc. shares of Altony SA,
an Uruguayan Sociedad Anonima (“Altony”), which owns 100% of the issued and
outstanding membership interests in South American Hedge Fund LLC, a Delaware
limited liability company (sometimes herein referred to as
“SAHF”).  At the closing of the Agreement, we issued 130,000,000
shares of our common stock to Egani, Inc. which constituted, following such
issuance, a majority of the outstanding shares of our common stock. Immediately
following the closing of the Agreement, Altony became a wholly owned subsidiary
of the Company. For accounting purposes, the transaction was treated as a
recapitalization of the Company, as of March 4, 2008, with Altony as the
acquirer.





The
principal business of Altony is the ownership and management of South American
Hedge Fund, which maintains its business office in Uruguay and has investments
in oil and gas concessions in Argentina and intends to focus its investment
activities in the energy sector.




Our
principal offices are located at 14301 North 87th Street,
# 310, Scottsdale, AZ 85260. Our telephone number is (480) 221-1989. Our
common stock is quoted on the Over-the-Counter Electronic Bulletin Board under
the symbol "DLTM.OB".


1


General





The
primary focus of the Company’s business at this time is the Company’s recently
acquired subsidiary, South American Hedge Fund, which has investments in oil and
gas concessions in Argentina and will continue its focus on the energy sector,
including the development and supply of energy and alternative energy sources in
Latin America and North America. As of December 31, 2008, we terminated all of
the construction technology activities that were carried out by Delta
Technologies, Inc. (a wholly owned subsidiary). Also as of December 31, 2008 the
securities trading activities of South American Hedge Fund were accounted for as
a discontinued operation.





Following
the acquisition of SAHF, management continued to pursue selected business
opportunities in the Middle East related to environmental remediation and other
projects. These activities are carried out through Delta-Envirotech, Inc.,
(“Envirotech”) a joint venture company formed in January 2004, with Hi-Tech
Consulting and Construction, Inc. We have operating control of Envirotech and
hold a 45% ownership interest. Envirotech has entered into strategic alliance
agreements with several United States-based entities with technologies and
products in the environmental field to support its activities.





Our
Oil and Gas Investments





Our main
source of revenue will derive from the sale of the crude oil and natural gas
produced from the oil and gas concessions in which we have made investments. In
August 2007, SAHF signed agreements to purchase partial ownership interests in
four in oil and gas concessions in Northern Argentina. The owners of these
concessions then started the process to obtain the necessary government and
environmental operating permits for the commercial operation of these
concessions. While we are not the operators of these concessions, we expect to
have representation on the operating committees that are responsible for
managing the business affairs of these concessions.





During
the year ended December 31, 2008, we invested approximately $1.7 million in
acquisitions of interests in concessions in proved oil and natural gas
properties in Salta Province, Argentina, listed below:





Concession
                
                % Participation
                
                Date Acquired
                
                # Wells
                
                Type of ProductionTartagal
                
                
                9
                %
                August
      2007
                
                
                21
                
                oil
      and gasMorillo
                
                
                9
                %
                August
      2007
                
                
                1
                
                oil
      and gasJollin
                
                
                23.5
                %
                August
      2007
                
                
                3
                
                oil
      and gasTonono
                
                
                23.5
                %
                August
      2007
                
                
                10
                
                oil
      and gas





Jollin
and Tonono Concessions





The
Company has a 23.5% ownership interest in the Jollin and Tonono oil and gas
concessions located in Salta Province, Argentina. During 2007, the Company
purchased 47% of these concessions and paid the purchase price by issuing a
non-interest bearing note in the principal amount of $1,820,000
to Oxipetrol-Petroleros de Occidente S.A. ("Oxipetrol"), one of the other
owners, with a maturity date of July 2008. The purchase price was
subsequently reduced to $1,270,000 by mutual agreement among the parties,
prior to the maturity date. During 2008, the Company exchanged 50% of its
ownership in this investment with a third party for no cash consideration,
however, the acquirer contractually agreed to assume 50% of the Company’s
obligations with respect to future development expenses.





During
the year ended December 31, 2008, majority owners of the Jollin and Tonono
concessions formed an Argentine-registered joint venture to operate these
concessions and amended its application for the government operating permits
seeking a ten-year renewal period beyond the initial 20-year operating license.
The joint venture paid, in the aggregate, approximately $848,00 of development
costs. Since SAHF is not currently registered as a foreign company in Argentina,
it could not become a member of the joint venture in 2008. The other owners of
the joint venture have agreed that, upon registration of the SAHF as a foreign
company in Argentina, it will be admitted as a member of the joint venture and
will retain its 23.5% ownership. However, the Company’s weighted average
pro-rata portion of the 2008 aggregate development costs will be repaid to the
other members from our pro-rata share of the future earnings. SAHF has applied
for foreign registration in Argentina and expects to be admitted as a member
of the joint venture during 2009.


2


Tartagal
and Morillo Concessions





The
Company has 9% ownership of the Tartagal and Morillo oil and gas concessions
located in Salta Province, Argentina. During 2007, the Company purchased 18%
ownership of these concessions and paid the purchase price by issuing a
non-interest bearing note in the principal amount of $480,000 to
Oxipetrol-Petroleros de Occidente S.A. ("Oxipetrol"), one of the other owners,
with a maturity date of July 2008. The purchase price was subsequently reduced
to $450,000, by mutual agreement among the parties, prior to the maturity date.
During 2008, the Company exchanged 50% of its ownership in this investment with
a third party for no cash consideration, however, the acquirer contractually
agreed to assume 50% of the Company’s obligations with respect to future
development expenses.





During
the year ended December 31, 2008, the majority owners of the Tartagal and
Morillo concessions agreed to form an Argentine-registered joint venture and
applied for government approval of the license to operate the concessions
for the next 25 years. SAHF expects to receive its foreign corporation
registration in 2009 and to be admitted as a member of the joint venture when it
is formed.




Exploration
Rights




During
2008, the Company purchased 40% of the oil and gas exploration rights to five
geographically defined areas in the Salta Province of Northern Argentina for
$697,000. Provided certain development activities are undertaken by owners,
these exploration rights will remain in effect until the year 2010. The initial
development costs and fees were paid by the majority owner and the Company
incurred no additional expenses related to this investment in 2008.





Development
Schedule for Our Oil and Gas Investments





In
December 2008, a well located in the Tonono Concession received government
approval to begin commercial production of oil. When the test re-entry well at
this location was completed in the fourth quarter of 2008, it initially produced
between 10-15 cubic meters of oil per day, the equivalent of 90-101 barrels of
oil.




The same
well also contains natural gas. A natural gas pipeline connecting the Jollin
Concession to a nearby refinery is in the pre-construction phase. It is expected
to become operational in during the second quarter of 2009. Upon completion, it
will permit the joint venture to commence deriving additional revenue from
natural gas sales.




Deliveries
of crude oil are expected to commence from the Tartagal and Morillo concessions
during the second quarter of 2009.




The main
costs associated with our oil and gas investments are related to oil and gas
property acquisition, drilling costs, initial well revitalization, gas pipeline
construction and ongoing operating expenses. The revitalization of wells allows
short-term cash increases while holding the lease for additional future
development.




Development
Activities




Development
projects on the concessions in which we have investments include accessing
additional productive formations in existing well bores, formation stimulation,
infill drilling on closer well spacing, and retrofitting or reworking existing
wells.




Business
Strategy




The key
elements of our business strategy are to:




·
            Make
      accretive acquisitions of producing properties generally characterized by
      long-lived reserves with stable production and reserve development
      potential; and to




·
            Add
      proved reserves and maximize cash flow and production through development
      projects and operational
efficiencies.




Our investments have focused on
concessions where there are shut-in, plugged and abandoned wells that have, in
our assessment, a high probability of additional recovery of reserves through
our revitalization process. The revitalization process is directed toward
bringing wells back into production, or to enhance production through ordinary
practices used in the oil and gas industry.


3




In
addition, we will continue to evaluate newly developed alternative energy
technologies for possible investment and development.





Customers




Crude oil
production from the Jollin Concessions is sold to nearby refineries, and is
transported by truck. The natural gas production will be transported by a
pipeline to be constructed to the Refinor oil company refinery also located in
the Salta Province in Northern Argentina. Sales are made based on spot market
price postings, and vary month to month. These prices typically are tied to
domestic market crude and natural gas prices.




Middle
East





In March
2007, Envirotech received a purchase agreement to supply equipment and services
for a factory to manufacture insulating concrete from (ICF) products for the
building industry in Saudi Arabia. After lengthy and unexpected delays, the
developer of the factory informed us during the fourth quarter of 2008 that all
further activity on this project has been suspended.





Envirotech
holds the exclusive Middle East distribution rights to a gas-imaging product,
which detects and visualizes harmful gasses produced by oilfield and refinery
operations. This product was field tested by ARAMCO, the Saudi government oil
company, during the third quarter of 2008. ARAMCO is currently evaluating
whether or not to purchase this technology and may elect to purchase it from a
competitor.





Since the
fourth quarter of 2006, Envirotech had been working with the operators of oil
sludge processing facilities in Bahrain and Kuwait to improve the processing
technology currently in use. In 2007 and 2008, testing of prototype processing
equipment provided through Envirotech was conducted in Saudi Arabia and Bahrain.
In December 2008, the sludge processing facilities were shut down by the
operators.





During
the second half of 2007, Envirotech, as a distributor, introduced an organic
supplement, designed to increase crop yield, to one of the major farming
operators in Saudi Arabia. During the third and fourth quarters of 2008, the
farm operator purchased sample quantities of the organic supplement for crop
testing. Envirotech received commission revenue of $43,000 associated with these
purchases. Subsequent purchases in commercial quantities will depend upon the
evaluation of the crop yield during the second quarter of 2009.





Competition





We
operate in the competitive area of oil and gas exploration and production. Many
of our competitors in the Salta Province of Argentina are larger,
well-established companies that have larger operating staffs and significantly
greater capital resources than we do.





It is difficult to compete
with large, well-capitalized companies for governmental or private sector
environmental remediation contracts. Many of these contracts require significant
up-front expenditures on behalf of the firm awarded the contract. There are many
established environmental remediation companies that have significantly greater
financial and personnel resources and technical expertise than we
do.


4





Employees





Currently,
we have three employees: Dr. Daniel R. Peralta, President and CEO; Malcolm W.
Sherman, Executive Vice President; and Martin G. Chilek, Senior Vice President
and Chief Financial Officer.




Item
1A. Risk Factors.


Investments
made by our subsidiary South American Hedge Fund may not be
profitable.





The
success of our investments in Argentina will depend to a great extent on the
operations, financial condition and management of the oil and gas concession and
exploration rights in which we have investments. Their success may depend upon
management of the operations in which the investments were made and numerous
other factors beyond our control.





Crude
oil and natural gas prices are volatile and a substantial reduction in these
prices could adversely affect our results and the price of our common
stock.




Our
revenues, operating results and future rate of growth depend highly upon the
prices we receive from crude oil and natural gas produced by the concession in
which we have investments. Historically, the markets for crude oil and natural
gas have been volatile and are likely to continue to be volatile in the future.
For example, the NYMEX daily settlement price for the prompt month oil contract
in 2008 ranged from a high of $145.29 per barrel to a low of $33.87 per barrel.
The NYMEX daily settlement price for the prompt month natural gas contract in
2008 ranged from a high of $13.58 per MMBtu to a low of $5.29 per MMBtu. The
markets and prices for crude oil and natural gas depend on factors beyond our
control. These factors include demand for crude oil and natural gas, which
fluctuates with changes in market and economic conditions, and other factors,
including:





•
            worldwide
      and domestic supplies of crude oil and natural
  gas;


•
            actions
      taken by foreign oil and gas producing
nations;


•
              political
      conditions and events (including instability or armed conflict)in
      crude oil or natural gas producing
regions;


•
            the
      level of global crude oil and natural gas
  inventories;


•
            the
      price and level of foreign imports;


•
            the
      price and availability of alternative
fuels;


•
            the
      availability of pipeline capacity and
  infrastructure;


•
            the
      availability of crude oil transportation and refining
      capacity;


•
            weather
      conditions;


•
            domestic
      and foreign governmental regulations and taxes;
  and


•
            the
      overall economic environment.




Significant
declines in crude oil and natural gas prices for an extended period may have the
following effects on our business:





•
            limiting
      our financial condition, liquidity, and ability to financeplanned
      capital expenditures and results of
operations;


•
            reducing
      the amount of crude oil and natural gas that can be producedeconomically;


•
            causing
      us to delay or postpone some of our capital
  projects;


•
            reducing
      our revenues, operating income and cash
flows;


•
            reducing
      the carrying value of our investments in crude oil and naturalgas
      properties; or


•
            limiting
      our access to sources of capital, such as equity and long-termdebt.





The
current recession could have a material adverse impact on our financial
position, results of operations and cash flows.


5


The oil
and gas industry is cyclical in nature and tends to reflect general economic
conditions. The U.S. and other world economies are in a recession, which could
last well into 2009 and beyond. The recession may lead to significant
fluctuations in demand and pricing for crude oil and natural gas production,
such as the decline in commodity prices which occurred during 2008 and into
2009. If commodity prices continue to decline, there could be additional
impairments of our investment assets or an impairment of goodwill.




Our
business involves many operating risks that may result in substantial losses for
which insurance may be unavailable or inadequate.




Our oil
and gas investments are subject to hazards and risks inherent in operating and
restoring oil and gas wells, such as fires, natural disasters, explosions,
casing collapses, surface cratering, pipeline ruptures or cement failures, and
environmental hazards such as natural gas leaks, oil spills and discharges of
toxic gases. Any of these risks can cause substantial losses resulting from
injury or loss of life, damage to or destruction of property, natural resources
and equipment, pollution and other environmental damages, regulatory
investigations and penalties, suspension of our operations and repair and
remediation costs. In addition, our liability for environmental hazards may
include conditions created by the previous owners of properties in which we have
investments or purchase or lease.




We do not
believe that insurance coverage for all environmental damages that could occur
is available at a reasonable cost. Losses could occur for uninsurable or
uninsured risks. The occurrence of an event that is not fully covered by
insurance could harm our financial condition and results of
operations.




The
proved reserve estimates may be inaccurate.




Estimates
of proved oil and gas reserves necessarily depend on a number of variables and
assumptions. Among others, changes in any of the following factors may cause
estimates to vary considerably from actual results:




•
            production
      rates, reservoir pressure and other subsurface
  information;


•
            future
      oil and gas prices;


•
            assumed
      effects of governmental regulation;


•
            future
      operating costs;


•
            future
      property, severance, excise and other taxes incidental to oil andgas
      operations;


•
            capital
      expenditures;


•
            work-over
      and remedial costs.




Dependence
on oil transportation companies and natural gas transportation
facilities.




The
marketability of natural gas production depends in large part on the
availability, proximity and capacity of pipeline systems. The unavailability of
or lack of available capacity on these systems and facilities could result in
the shut-in of producing wells or the delay or discontinuance of development
plans for properties. The lack of availability of these facilities for an
extended period of time could negatively affect our revenues. Government
regulation of oil and natural gas production and transportation, tax and energy
policies, changes in supply and demand, pipeline pressures, damage to or
destruction of pipelines and general economic conditions could adversely affect
the ability to produce, gather and transport oil and natural gas.




Competition
in our industry is intense and many of our competitors have greater financial
and technological resources.




We have
investments in the competitive area of oil and gas exploration and production.
Many competitors are large, well-established companies that have larger
operating staffs and significantly greater capital resources.





We
are subject to various governmental regulations and environmental risks that may
cause us to incur substantial costs.




From time
to time, in varying degrees, political developments and government laws and
regulations affect the operations in which we have investments. In particular,
price controls, taxes and other laws relating to the crude oil and natural gas
industry, changes in these laws and changes in administrative regulations have
affected and in the future could affect crude oil and natural gas production,
operations and economics. We cannot predict how government agencies or courts
will interpret existing laws and regulations or the effect these adoptions and
interpretations may have on our business or financial
condition.


6





The
development, production of, and exploration for crude oil and natural gas, as
well as safety matters, are subject to laws and regulations promulgated by
international authorities. Legal requirements are frequently changed and subject
to interpretation and we are unable to predict the ultimate cost of compliance
with these requirements, their effect on our investments. Compliance with
governmental laws and regulations may require significant
expenditures.





Environmental
laws and regulations change frequently and the implementation of new, or the
modification of existing, laws or regulations could negatively impact our
operations. The discharge of natural gas, crude oil, or other pollutants into
the air, soil or water may give rise to significant liabilities on our part to
the government and third parties and may require us to incur substantial costs
of remediation. In addition, we may incur costs and penalties in addressing
regulatory agency procedures involving instances of possible
non-compliance.




Our
acquisition activities may not be successful, which may hinder our replacement
of reserves and adversely affect our results of operations.




Under
certain circumstances, we may pursue acquisitions of businesses that complement
or expand our current business. Even if we do identify attractive opportunities,
there is no assurance that we will be able to complete the acquisition of the
business or prospect on commercially acceptable terms. If we do complete an
acquisition, we must anticipate difficulties in integrating its operations,
systems, technology, management and other personnel with our own. These
difficulties may disrupt our ongoing operations, distract our management and
employees and increase our expenses.




Competition
for experienced personnel may negatively impact our operations.




As we
continue to increase our asset base and the scope of our operations, our future
profitability will depend on our ability to attract and retain qualified
personnel. The loss of any key executives or other key personnel could have a
material adverse effect on investments results and revenues. In particular, the
loss of the services of our President, Dr. Daniel Peralta, could adversely
affect our South American oil and gas investment results.




International operations expose us
to political, economic and currency risks.





With
regard to our investments in oil and gas concessions located outside of the
United States, we are subject to the risks of doing business abroad,
including,





·
            Currency
      fluctuations;


·
            Changes
      in tariffs and taxes; and


·
            Political
      and economic instability.





Changes
in currency exchange rates may affect the relative costs of operations in
Argentina, and may affect the cost of certain items required in oil and gas
processing, thus possibly adversely affecting our profitability.





There are
inherent risks for the foreseeable future of conducting business
internationally. Language barriers, foreign laws and tariff and taxation issues
all have a potential negative effect on our ability to transact business.
Changes in tariffs or taxes applicable to our investments in foreign operations
may adversely affect our profitability. Political instability may increase the
difficulties and costs of doing business. We may be subject to the jurisdiction
of the government and/or private litigants in foreign countries where we
transact business, and may be forced to expend funds to contest legal matters in
those countries in disputes with those governments or with customers or
suppliers.





We do not expect to pay
dividends.





We have
never paid dividends on our common stock. Management anticipates that any
earnings generated will be used to finance our current and planned business
operations. For the foreseeable future, we do not expect to pay cash dividends
to holders of our common stock.


7




Item
1B. Unresolved Staff Comments.





Not
applicable.




Item
2. Properties.




In
February 2009, we entered into a two-year lease for our principal office in
Scottsdale, Arizona. Currently, we also lease office space in Sellersville,
Pennsylvania on a month-to-month basis. We anticipate that our current office
space will accommodate our operations for the foreseeable future.




Item 3. Legal
Proceedings.





On
September 16, 2008, the Company was notified of a complaint filed with the
Pennsylvania Department of Labor & Industry by its former President and CEO
alleging non-payment of wages in the amount of $53,271. The Company also
received notice of a similar complaint filed by a former employee alleging
non-payment of wages in the amount of $17,782. In October 2008, the Company
entered into repayment agreements with both of the former employees. As of the
date of this report, the Company has not made any payments to these two former
employees pursuant to these agreements.





On
February 5, 2009, the Company was notified that it was named as a co-defendant
in a citation corporate filed in the District Court in Harris County, Texas in
November 2007, by Equisource Ventures. The suit alleges breach of contract and
unjust enrichment, and the plaintiff seeks actual and exemplary damages for
unpaid consulting fees, attorneys’ fees, other costs and interest. The Company
denies any wrongdoing and will contest vigorously the claims asserted against
it. The Company also believes that the resolution of this matter will have no
material effect upon the Company or its operations.




Item
4. Submission of Matters to a Vote of Security Holders.




Not
applicable.


8




PART
II




Item
5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities.





Our
common stock has been quoted on the Over-the-Counter Bulletin Board operated by
the National Association of Securities Dealers, since approximately February 1,
2001.





Our
shares are listed under the symbol "DLTM”. The quotations in the table below
reflect inter-dealer prices, without retail mark-up, mark-down, or commission
and may not represent actual transactions.





High
                  
                  
                  Low2007:
                  1st
      Quarter
                  
                  
                  0.16
                  
                  
                  
                  0.042nd
      Quarter
                  
                  
                  0.12
                  
                  
                  
                  0.043rd
      Quarter
                  
                  
                  0.08
                  
                  
                  
                  0.044th
      Quarter
                  
                  
                  0.06
                  
                  
                  
                  0.022008:
                  1st
      Quarter
                  
                  
                  0.07
                  
                  
                  
                  0.012nd
      Quarter
                  
                  
                  0.07
                  
                  
                  
                  0.043rd
      Quarter
                  
                  
                  0.08
                  
                  
                  
                  0.044th
      Quarter
                  
                  
                  0.08
                  
                  
                  
                  0.032009:
                  1st
      Quarter
                  
                  
                  0.06
                  
                  
                  
                  0.032nd
      Quarter
                  
                  
                  0.07
                  
                  
                  
                  0.07(through
      April 6, 2009)





During
the last two fiscal years, no cash dividends have been declared on Delta's
common stock and Company management does not anticipate that dividends
will be paid in the foreseeable future. As of April 6, 2009, there were 74
record holders of our common stock.





Securities
Authorized for Issuance under Equity Compensation Plans





The
following table sets forth information with respect to our common stock issued
and available to be issued under outstanding options, warrants and rights as of
December 31, 2008.




(a)
                                
                                
                                (b)
                                
                                
                                (c)Plan category
                                
                                Number of securities to be
                                  issued upon exercise of
                                  outstanding
      options,
                                  warrants and rights
                                
                                
                                Weighted-average exercise
                                  price of outstanding
                                  options, warrants and
                                  rights
                                
                                
                                Number of securities
                                  remaining available for
                                  future issuance under
                                  equity compensation plans
                                  (excluding
      securities
                                  reflected in column (a))Equity
      compensation plans approved by security holders
                                
                                
                                3,500,000
                                
                                
                                $
                                0.11
                                
                                
                                
                                6,500,000Equity
      compensation plans not  approved by security
    holdersTotal
                                
                                
                                3,500,000
                                
                                
                                $
                                0.11
                                
                                
                                
                                6,500,000





Item
6. Selected Financial Data.





Not
applicable.


9




Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.





The
following discussion of our consolidated financial condition and results of operations
should be read in conjunction with the consolidated financial statements and notes
thereto and the other financial information included elsewhere in this
report.





Certain
statements contained in this report, including, without limitation, statements
containing the words "believes," "anticipates," "expects" and words of similar
import, constitute "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks and uncertainties. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including our ability to create, sustain, manage
or forecast our growth; our ability to attract and retain key personnel; changes
in our business strategy or development plans; competition; business
disruptions; adverse publicity; and international, national and local general
economic and market conditions.





GENERAL





We were
incorporated in the State of Delaware on November 17, 1999. If we are not able
to generate the revenue we anticipate in our current business plan, we may be
required to raise additional debt or equity capital.




RESULTS
OF OPERATIONS





During
the fiscal year ended December 31, 2008, we incurred a net loss
of approximately $4.6 million, primarily due to a loss from continuing
operations of approximately $2.3 million which included a $860,000 loss from the
exchange of oil and gas investments, and a loss from discontinued operations of
approximately $2.3 million. The loss from discontinued operations primarily
consisted of a $2 million loss from the liquidation of the investment portfolio
and approximately $467,000 in impairment charges, offset by a gain on disposal
of discontinued operations of approximately $230,000. The Independent Auditors'
Report and Note 1 of the Notes to Consolidated Financial Statements accompanying
this report state that substantial doubt has been raised about our ability to
continue as a going concern.





2008
COMPARED TO 2007





For
accounting and financial reporting purposes only, our acquisition of Altony on
March 4, 2008 was treated as a reverse merger, with Altony as the acquirer. Our
consolidated financial statements for the twelve months ended December 31, 2007
are those of Altony (including its SAHF subsidiary on a consolidated basis). In
2008, we incurred a loss from continuing operations of approximately $2,300,000
compared to net income of approximately $342,000 in the twelve months ended
December 31, 2007.





PLAN OF
OPERATION





Our South
American Hedge Fund subsidiary has investments in oil and gas exploration and
production in Argentina. Prior to its acquisition, the Company had established
subsidiaries to conduct business operations focused on providing environmental
and construction technologies and services in the Far East, the Middle East and
the United States.





Following
the acquisition of Altony and its South American Hedge Fund subsidiary,
management has continued to pursue selected business opportunities in the Middle
East. In 2008, we discontinued our construction technology business, our
operations in the Far East (Indonesia) and the remaining activities of our real
estate development joint ventures. In addition, the securities trading
activities of the South American Hedge Fund were accounted for as discontinued
operations.





South
America





We have
invested in ownership interests in four oil and gas concessions in Argentina.
Our major source of revenue will derive form the sale of oil and natural gas
produced by these concessions.


10





In 2009,
we expect to become a 23.5% member of the Argentine-registered joint venture
that owns the Jollin and Tonono Concessions where commercial sales of oil and
gas are expected to begin during the second quarter.





We also
expect in 2009 to become a 9% member of the joint venture that will own the
Tartagal and Morillo Concessions, once that joint venture is formed, and we
become a foreign registered company in Argentina. This concession is expected
begin commercial production of oil during the second quarter.





In 2008,
we acquired 40% ownership in the oil and gas exploration rights to five areas in
Northern Argentina and intend to expand the exploration activities in
2009.




Middle
East





Envirotech
holds the exclusive Middle East distribution rights to a gas-imaging product,
which detects and visualizes harmful gasses produced by oilfield and refinery
operations. During 2008, this product was field tested by ARAMCO which is
evaluating whether or not to purchase this product from Envirotech or a
competitor.





Envirotech,
as a distributor, introduced an organic supplement, designed to increase crop
yield, to a major farming operation in Saudi Arabia that purchased sample
quantities for field trials during 2008. Envirotech received sales commissions
for these initial purchases. Subsequent purchases will depend upon the
evaluation of the crop yield in the second quarter of 2009.





FUNDING





Our
current business plan for 2009 and beyond anticipates substantial increases in
revenue primarily from our investments in oil and gas concession in Argentina.
If we do not achieve the expected levels of revenue, we may be required to raise
additional capital through equity and/or debt financing.




LIQUIDITY





Because
we have generated limited revenue from our current operations, we have incurred
debt to pay our operating expenses.




At
December 31, 2008 we had a working capital deficit of approximately $2,440,000
compared to a working capital surplus of approximately $4,470,000 in 2007. This
increase for the year ended December 31, 2007 is primarily the result of the
liquidation of the securities investment portfolio of the South American Hedge
Fund and reinvestment in oil and gas concessions.





Since we
had limited revenue in 2008, we will incur a working capital deficit until our
revenue is sufficient to cover our operating expenses.




In 2008,
to provide financing for our activities, we issued $280,553 of promissory notes
to stockholders of the Company.





CRITICAL
ACCOUNTING ISSUES





The
Company's discussion and analysis of its financial condition and results of operations
are based upon the Company's financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of America.
The preparation of the financial statements requires the Company to make estimates
and judgments that affect the reported amount of assets, liabilities, and expenses,
and related disclosures of contingent assets and liabilities. On an on-going basis,
the Company evaluates its estimates, including those related to intangible
assets, income taxes and contingencies and litigation. The Company bases its
estimates on historical experience and on various assumptions that are believed
to be reasonable under the
circumstances, the results of which form the basis for making judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.


11


Other
Matters





Accounting
Pronouncements





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
enhances existing guidance for measuring assets and liabilities using fair
value. This Standard provides a single definition of fair value, together with a
framework for measuring it, and requires additional disclosure about the use of
fair value to measure assets and liabilities. In February 2008, the FASB issued
FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and
its “Related Interpretive Accounting Pronouncements that Address Leasing
Transactions,” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective
Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No. 13
and its related interpretive accounting pronouncements that address leasing
transactions from the requirements of SFAS No. 157, with the exception of fair
value measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective
for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 4 of
Notes to Consolidated Financial Statements for disclosures related to the
Company’s financial assets accounted for at fair value on a recurring or
nonrecurring basis. The Company will provide the additional disclosure required
relating to the fair value measurement of nonfinancial assets and nonfinancial
liabilities when it completes its implementation of SFAS No. 157 on January
2009, as required, and does not believe they will have a significant impact on
its financial statements.





In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option
for Financial Assets and Financial Liabilities,” providing companies with an
option to report selected financial assets and liabilities at fair
value.  The Standard’s objective is to reduce both complexity in
accounting for financial instruments and the volatility in earnings caused by
measuring related assets and liabilities differently.  It also
requires entities to display the fair value of those assets and liabilities for
which the Company has chosen to use fair value on the face of the balance
sheet.  SFAS 159 is effective for fiscal years beginning after
November 15, 2007. The adoption of SFAS No. 159 on January 1, 2008 did not have
a material impact on the Company’s financial statements.




In June
2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3,
"Accounting for Nonrefundable Advance Payments for Goods or Services Received
for Use in Future Research and Development Activities," which is effective for
calendar year companies on January 1, 2008.  The Task Force concluded
that nonrefundable advance payments for goods or services that will be used or
rendered for future research and development activities should be deferred and
capitalized.  Such amounts should be recognized as an expense as the
related goods are delivered or the services are performed, or when the goods or
services are no longer expected to be provided. EITF Issue No. 07-3 did not
impact the Company’s financial statements.




In
December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business
Combinations.” This Statement is intended to improve the relevance, completeness
and representational faithfulness of the information provided in financial
reports about the assets acquired and the liabilities assumed in a business
combination.  This Statement requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the Statement. Under SFAS 141(R),
acquisition-related costs, including restructuring costs, must be recognized
separately from the acquisition and will generally be expensed as incurred. That
replaces SFAS 141’s cost-allocation process, which required the cost of an
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values. SFAS 141(R) shall be applied
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual report period beginning on or after
December 15, 2008. The Company will implement this Statement in
2009.


12




In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 62 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States.  This Statement is effective sixty days following
the SEC’s approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles.”  The Company is currently evaluating
the potential impact, if any, of the adoption of SFAS No. 162 on its financial
statements.





In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 establishes new accounting and reporting standards
for the non-controlling interest in a subsidiary and for the deconsolidation of
a subsidiary. Specifically, this statement requires the recognition of
non-controlling interests (minority interest) as equity in the consolidated
financial statements and separate from parent’s equity. The amount of net income
attributable to the non-controlling interest will be included in consolidated
net income on the face of the income statement.  SFAS 160 clarifies
that changes in a parent’s ownership in a subsidiary that does not result in
deconsolidation are equity transactions if the parent retains its controlling
financial interest. In addition, this statement requires that a parent recognize
a gain or loss in net income when a subsidiary is deconsolidated. Such gain or
loss will be measured using the fair value of the non-controlling equity
investment of the deconsolidation date. SFAS 160 also includes expanded
disclosure requirements regarding the interest of the parent and its
non-controlling interest. SFAS 160 is effective for fiscal years, and interim
periods other than fiscal years, beginning on or after December 15,
2008.  The adoption of SFAS 160 does not expect to have a material
impact on the Company’s Consolidated Balance Sheet.





CRITICAL
ACCOUNTING POLICIES





The
Securities and Exchange Commission recently issued "Financial Reporting Release
No.  60 Cautionary Advice Regarding Disclosure About Critical
Accounting Policies" ("FRR 60"), suggesting companies provide additional
disclosures, discussion and commentary on those accounting policies considered
most critical to its business and financial reporting
requirements.  FRR 60 considers an accounting policy to be critical if
it is important to the Company's financial condition and results of operations,
and requires significant judgment and estimates on the part of management in the
application of the policy.  For a summary of the Company's significant
accounting policies, including the critical accounting policies discussed below,
please refer to the accompanying notes to the financial statements.





The
Company assesses potential impairment of its long-lived assets, which include
its property and equipment, investments, and its identifiable intangibles such
as deferred charges under the guidance of SFAS 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets".  The Company must
continually determine if a permanent impairment of its long-lived assets has
occurred, such as oil and gas reserves, and write down the assets to their
fair values and charge current operations for the measured
impairment.




Item
7A. Quantitative and Qualitative Disclosures About Market Risk.





Interest Rate Risk - Interest rate
risk refers to fluctuations in the value of a security resulting from changes in
the general level of interest rates. Investments that are classified as cash and
cash equivalents have original maturities of three months or less. Our interest
income is sensitive to changes in the general level of U.S. interest
rates.


13


We do not
have significant short-term investments, and due to their short-term nature, we
believe that there is not a material risk exposure.




Credit
Risk - Our accounts receivable are subject, in the normal course of business, to
collection risks. We regularly assess these risks and have established policies
and business practices to protect against the adverse effects of collection
risks. As a result we do not anticipate any material losses in this
area.





Commodity
Price Risk – We are exposed to market risks related to price volatility of crude
oil and natural gas. The prices of crude oil and natural gas affect our
revenues, since sales of crude oil and natural gas from our South American
investments comprise nearly all of the components of our revenue.  A
decline in crude oil and natural gas prices will likely reduce our revenues,
unless there are offsetting production increases. We do not use derivative
commodity instruments for trading purposes.





The
prices of the commodities that the Company produces are unsettled at this
time.  At times the prices seem to be drift down and then either
increase or stabilize for a few days.  Current price movement seems to
be slightly up but with the prices of the traditionally marketed products
(gasoline, diesel, and natural gas as feed stocks for various industries, power
generation, and heating) are not showing material increases.  Although
prices are difficult to predict in the current environment, the Company
maintains the expectation that demand for crude oil and natural gas will
continue to increase for the foreseeable future due to the underling factors
that oil and natural gas based commodities are both sources of raw energy and
are fuels that are easily portable.





Foreign
Currency Risk - Our financial results could be affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in
foreign markets. Because our revenue is reported in U.S. dollars, fluctuating
exchange rates of the local currency, when converted into U.S. dollars, may have
an adverse impact on our revenue and income. We have not hedged foreign
currency exposures related to transactions denominated in currencies other than
U.S. dollars. We do not engage in financial transactions for trading or
speculative purposes.


14




Item
8. Financial Statements and Supplementary Data.


15





DELTA
MUTUAL, INC. AND SUBSIDIARIES





INDEX
TO FINANCIAL STATEMENTS








PageReport
      of Independent Registered Public Accounting FirmConsolidated
      balance sheets as of December 31, 2008 and 2007
                    18Consolidated
      statements of operations for the years endedDecember
      31, 2008 and 2007
                    19Consolidated
      statements of stockholders’ equity (deficiency)as
      of December 31, 2008 and 2007
                    20Consolidated
      statements of cash flows for the years endedDecember
      31, 2008 and 2007
                    22Notes
      to consolidated financial statements
                    24


16




[LETTERHEAD
OF WIENER, GOODMAN & COMPANY, P.C.]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders of
 Delta
Mutual, Inc. and Subsidiaries
 
 We have
audited the accompanying consolidated balance sheet of Delta Mutual, Inc. and
subsidiaries (“Delta” or the “Company”) as of December 31, 2008 and the related
consolidated statement of operations, stockholders’ deficiency and cash flows
for the year then ended.  These financial statements are the
responsibility of the Company’s management.  Our responsibility is to
express an opinion on these financial statements based on our
audit.  The financial statements of Delta Mutual, Inc. and
Subsidiaries, for the year ended December 31, 2007, were audited by other
auditors whose report dated June 20, 2008, expressed an unqualified opinion on
those statements.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the 2008 financial statements present fairly, in all material respects,
the financial position of Delta Mutual, Inc. and subsidiaries as of December 31,
2008 and the results of their operations and their cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern.  Company management has
embarked upon a new mission and strategic direction, by establishing a series of
subsidiaries and joint ventures, primarily engaged in providing environmental
and construction technologies and services to certain geographic reporting
segments.  During 2008, the Company has again changed direction and
has invested in oil and gas concessions in South America.  As more
fully explained in Note 1 to the financial statements, the Company has a
deficiency in working capital at December 31, 2008, incurred losses from
operations, needs to obtain additional financing to meet its obligations on a
timely basis and to fulfill its proposed activities and ultimately achieve a
level of sales adequate to support its cost structure.
 
 These
uncertainties raise substantial doubt about the Company’s ability to continue as
a going concern.  Management’s plans are also described in Note
1.  The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties should
the Company be unable to continue as a going concern.
 
 /s/
Wiener, Goodman & Company, P.C.
 
 Eatontown,
New Jersey
 April 13,
2009
  17


DELTA
MUTUAL, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





December 31,2008
                                
                                
                                2007ASSETSCurrent
      Assets:Cash
                                
                                $
                                13,957
                                
                                
                                $
                                -Investments
                                
                                
                                -
                                
                                
                                
                                4,709,020Total
      Current Assets
                                
                                
                                13,957
                                
                                
                                
                                4,709,020Property
      and equipment - net
                                
                                
                                804
                                
                                
                                
                                -Investments
      in non-consolidated affiliates
                                
                                
                                1,780,024
                                
                                
                                
                                2,300,000Other
      assets
                                
                                
                                650
                                
                                
                                
                                -TOTAL
      ASSETS
                                
                                $
                                1,795,435
                                
                                
                                $
                                7,009,020LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIENCY)Current
      Liabilities:Accounts
      payable
                                
                                $
                                363,004
                                
                                
                                $
                                239,552Accrued
      expenses
                                
                                
                                1,363,395
                                
                                
                                
                                -Convertible
      debt
                                
                                
                                253,740
                                
                                
                                
                                -Notes
      payable
                                
                                
                                461,208
                                
                                
                                
                                2,300,000Total
      Current Liabilities
                                
                                
                                2,441,347
                                
                                
                                
                                2,539,552Stockholders'
      Equity (Deficiency):Common
      stock $0.0001 par value - authorized 250,000,000 shares; 221,849,158 and
      130,000,000 shares issued and outstanding at December 31, 2008 and
      December 31, 2007, respectively
                                
                                
                                22,185
                                
                                
                                
                                13,000Additional
      paid-in-capital
                                
                                
                                3,762,831
                                
                                
                                
                                2,587,000Retained
      earnings (deficit)
                                
                                
                                (4,430,928
                                )
                                
                                
                                1,869,468Total
      Stockholders' Equity (Deficiency)
                                
                                
                                (645,912
                                )
                                
                                
                                4,469,468TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                                
                                $
                                1,795,435
                                
                                
                                $
                                7,009,020





See Notes
to Consolidated Financial Statements


18





DELTA
MUTUAL INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





Years Ended December 31,2008
                              
                              
                              2007Revenue:Sales
      commissions
                              
                              $
                              43,365
                              
                              
                              $
                              -Costs
      and expenses:General
      and administrative expenses
                              
                              
                              1,490,333
                              
                              
                              
                              -Loss
      on sale/exchange of assets
                              
                              
                              860,000
                              
                              
                              
                              -2,350,333
                              
                              
                              
                              -Loss
      from continuing operations
                              
                              
                              (2,306,968
                              )
                              
                              
                              -Interest
      income
                              
                              
                              26,386
                              
                              
                              
                              -Interest
      expense
                              
                              
                              6,746
                              
                              
                              
                              -Loss
      from continuing operations before provision for (benefit from) income
      taxes
                              
                              
                              (2,273,836
                              )
                              
                              
                              -Provision
      for (benefit from) Income taxes
                              
                              
                              -
                              
                              
                              
                              -Net
      loss from continuing operations
                              
                              
                              (2,273,836
                              )
                              
                              
                              -Discontinued
      operations:Gain
      (loss) on disposal of Far East operations andSouth
      American Hedge Fund operations, andUnited
      States construction technology activity
                              
                              
                              (2,310,473
                              )
                              
                              
                              341,556Net
      earnings (loss)
                              
                              $
                              (4,584,309
                              )
                              
                              $
                              341,556Earnings
      (loss) per common shareBasic
      and diluted:Net
      earnings from continuing operations
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.00
                              )Discontinued
      operations:Loss
      on disposal of Far East operations and United States construction
      technology activity
                              
                              $
                              (0.01
                              )
                              
                              $
                              (0.01
                              )Net
      earnings (loss) per common share
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.01
                              )Weighted
      average number of common  shares outstanding- basic and
      diluted
                              
                              
                              205,895,182
                              
                              
                              
                              130,000,000





See Notes
to Consolidated Financial Statements


19


DELTA
MUTUAL, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)





Number
      ofCommon
                                                    
                                                    
                                                    Common
                                                    
                                                    
                                                    Paid
      in
                                                    
                                                    
                                                    Retained
      EarningsShares
                                                    
                                                    
                                                    Stock
                                                    
                                                    
                                                    Capital
                                                    
                                                    
                                                    (Deficit)
                                                    
                                                    
                                                    TotalBalance,
      January 1, 2007
                                                    
                                                    
                                                    130,000,000
                                                    
                                                    
                                                    $
                                                    13,000
                                                    
                                                    
                                                    $
                                                    2,587,000
                                                    
                                                    
                                                    $
                                                    1,527,912
                                                    
                                                    
                                                    $
                                                    4,127,912Net
      earnings
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    341,556
                                                    
                                                    
                                                    
                                                    341,556Balance,
      December 31, 2007
                                                    
                                                    
                                                    130,000,000
                                                    
                                                    
                                                    
                                                    13,000
                                                    
                                                    
                                                    
                                                    2,587,000
                                                    
                                                    
                                                    
                                                    1,869,468
                                                    
                                                    
                                                    
                                                    4,469,468





See Notes
to Consolidated Financial Statements


20


DELTA
MUTUAL, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)


(Continued)





Number
      ofCommon
                        
                        
                        Common
                        
                        
                        Paid
      in
                        
                        
                        Retained
      EarningsShares
                        
                        
                        Stock
                        
                        
                        Capital
                        
                        
                        (Deficit)
                        
                        
                        TotalBalance,
      January 1, 2008
                        
                        
                        130,000,000
                        
                        
                        
                        13,000
                        
                        
                        
                        2,587,000
                        
                        
                        
                        1,869,468
                        
                        
                        
                        4,469,468Effect
      of reverse acquisition
                        
                        
                        78,882,953
                        
                        
                        
                        7,888
                        
                        
                        
                        -
                        
                        
                        
                        (1,716,087
                        )
                        
                        
                        (1,708,199
                        )Issuance
      of common stock for services(valued at $0.02 - $0.05 per
      share)
                        
                        
                        10,550,000
                        
                        
                        
                        1,055
                        
                        
                        
                        237,445
                        
                        
                        
                        -
                        
                        
                        
                        238,500Issuance
      of common stock for debt(valued at $0.05 - $0.07per
    share)
                        
                        
                        2,300,571
                        
                        
                        
                        230
                        
                        
                        
                        143,370
                        
                        
                        
                        -
                        
                        
                        
                        143,600Issuance
      of common stock for interest(valued
      at $0.05- $0.07 per share)
                        
                        
                        115,634
                        
                        
                        
                        12
                        
                        
                        
                        7,036
                        
                        
                        
                        -
                        
                        
                        
                        7,048Contribution
      from stockholder
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,000
                        
                        
                        
                        -
                        
                        
                        
                        1,000Stock
      based compensation expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        786,980
                        
                        
                        
                        -
                        
                        
                        
                        786,980Net
      loss
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (4,584,309
                        )
                        
                        
                        (4,584,309
                        )Balance,
      December 31, 2008
                        
                        
                        221,849,158
                        
                        
                        $
                        22,185
                        
                        
                        $
                        3,762,831
                        
                        
                        $
                        (4,430,928
                        )
                        
                        $
                        (645,912
                        )





See Notes
to Consolidated Financial Statements


21


DELTA
MUTUAL, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Years Ended December 31,2008
                  
                  
                  2007Cash
      flows from operating activities:Net
      earnings (loss)
                  
                  $
                  (4,584,309
                  )
                  
                  $
                  341,556Adjustments
      to reconcile net earnings (loss) to net cash used in operating
      activities:Depreciation
      and amortization
                  
                  
                  25,641
                  
                  
                  
                  -Non-cash
      compensation
                  
                  
                  238,500
                  
                  
                  
                  -Impairment
      charge
                  
                  
                  467,995
                  
                  
                  
                  -Stock-based
      compensation expense
                  
                  
                  786,980
                  
                  
                  
                  -Loss
      on sale/exchange of assets
                  
                  
                  860,000
                  
                  
                  
                  -Gain
      on disposal of operations
                  
                  
                  (230,057
                  )
                  
                  
                  -Changes
      in operating assets and liabilities
                  
                  
                  (62,560
                  )
                  
                  
                  -Net
      cash provided by (used in) operating activities
                  
                  
                  (2,497,810
                  )
                  
                  
                  341,556Cash
      flows from investing activities:Net
      cash acquired upon effect of reverse acquisition
                  
                  
                  57,633
                  
                  
                  
                  1,207,947Proceeds
      from sale of investments
                  
                  
                  7,263,823Purchase
      of investments
                  
                  
                  (2,618,502
                  )
                  
                  
                  (866,391
                  )Purchase
      of exploration rights
                  
                  
                  (697,000
                  )Purchase
      of concession investments
                  
                  
                  (1,720,000
                  )Net
      cash provided by (used in)  investing activities
                  
                  
                  2,285,954
                  
                  
                  
                  (341,556
                  )Cash
      flows from financing activities:Proceeds
      from loans
                  
                  
                  280,553
                  
                  
                  
                  -Repayment
      of loan
                  
                  
                  (60,000
                  )
                  
                  
                  -Contribution
      from stockholder
                  
                  
                  1,000
                  
                  
                  
                  -Proceeds
      from minority interest
                  
                  
                  4,260
                  
                  
                  
                  -Net
      cash provided by  financing activities
                  
                  
                  225,813
                  
                  
                  
                  -Net
      increase in cash
                  
                  
                  13,957
                  
                  
                  
                  -Cash
      - Beginning of period
                  
                  
                  -
                  
                  
                  
                  -Cash
      - End of period
                  
                  $
                  13,957
                  
                  
                  $
                  -





See Notes
to Consolidated Financial Statements


22





DELTA
MUTUAL, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Continued)





Years Ended December 31,2008
                
                
                2007Changes
      in operating assets and   liabilities consists
      of:(Increase)
      decrease  in prepaid expenses
                
                $
                1,914
                
                
                $
                -Increase
      in accounts payable and accrued expenses
                
                
                (64,474
                )
                
                
                -$
                (62,560
                )
                
                $
                -Supplementary
      information:Non-cash
      financing activities:Issuance
      of common stock for debt
                
                $
                143,600
                
                
                $
                -Issuance
      of common stock in lieu of payment of accrued interest
                
                $
                7,048
                
                
                $
                -Issuance
      of common stock for services
                
                $
                238,500
                
                
                $
                -Adjustment
      of purchase price of investments and related debt
                
                $
                580,000Details
      of reverse acquisition:Fair
      value of assets acquired
                
                $
                544,637Liabilities
      assumed
                
                
                2,226,836Stockholders'
      deficiency assumed
                
                $
                (1,708,199
                )





See Notes
to Consolidated Financial Statements


23


DELTA
MUTUAL, INC. AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 For the
Years Ended December 31, 2008 and 2007
 
 1.
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 Organization
 
 Delta
Mutual, Inc. and subsidiaries (“Delta” or the “Company”) was incorporated in
Delaware on November 17, 1999. Since 2003, the principal business activities of
the Company were focused on providing environmental and construction
technologies and services to certain geographic reporting segments in the Far
East, Middle East and the United States. During the year ended December 31,
2008, the Company discontinued all its operations in the Far East
(Indonesia) and discontinued its construction technology activities that
were conducted through its wholly owned U.S. subsidiary, Delta
Technologies, Inc. See Notes 1, 4, 5 and 7 for further information
regarding these discontinued operations.
 
 On March
4, 2008, the Company entered into a Membership Interest Purchase Agreement (the
“Agreement”) with Egani, Inc., an Arizona corporation (“Egani”). Pursuant to the
Agreement, the Company acquired from Egani all of the issued and outstanding
shares of stock of Altony S.A., an Uruguay Sociedad Anonima (“Altony”), which
owns 100% of the issued and outstanding membership interests in South American
Hedge Fund LLC, a Delaware limited liability company (“SAHF”). At the closing of
the Agreement, the Company issued 130,000,000 shares of its common stock to
Egani for the purchase of all of the outstanding shares of stock in Altony which
constituted, following such issuance, a majority of the outstanding shares of
the Company’s common stock.
 
 Immediately
following the closing of the Agreement, Altony became a wholly owned subsidiary
of the Company. For accounting purposes only, the transaction was treated as a
recapitalization of the Company, as of March 4, 208, with Altony as the
acquirer. The financial statements prior to March 4, 2008 are those of Altony
and reflect the assets and liabilities of Altony at historical carrying amounts.
The financial statements show a retroactive restatement of Altony’s historical
stockholders’ equity to reflect the equivalent number of shares issued to
Egani.
 
 The
principal business activity of Altony is the ownership and management of its
SAHF subsidiary. During the year ended December 31, 2008, SAHF shifted its focus
from investments in securities of Latin American entities to investments in oil
and gas concessions and exploration rights in Argentina and intends to continue
its focus on the energy sector, including the development and supply of energy
and alternate energy sources in Latin America and North America.
 
 In 2007,
SAHF acquired partial ownership interests in four oil and gas concessions
in Argentina. The majority owners of these concessions have established joint
ventures, registered in Argentina, that are in the process of obtaining the
necessary government and environmental permits to begin operations at these
concessions. SAHF will become a member of the joint ventures in 2009, when it
receives its foreign registration in Argentina. In the first quarter of 2008,
SAHF agreed to exchange half of the ownership interests it held in the
concessions to a third party, that agreed to assume 50% of the SHAF’s subsequent
development costs related to these four concessions. As of December 31, 2008,
the Company’s ownership interests in these concessions ranged from nine to 23.5
percent.
  24
 
 In 2008,
SAHF acquired 40% of the rights to explore for oil and gas in five geographic
areas located in Northern Argentina.
 
 Following
the acquisition of Altony, the Company continued to pursue selected business
opportunities in the Middle East that are conducted by its joint venture
subsidiary Delta-Envirotech, Inc. (“Envirotech”), headquartered in
Virginia.
 
 BASIS OF
PRESENTATION
 
 The
Company's financial statements for the year ended December 31, 2008 have been
prepared on a going concern basis which contemplates the realization of assets
and settlement of liabilities and commitments in the normal course of business.
The Company had limited revenue in 2008 and as of December 31, 2008, there was a
working capital deficit of approximately $2.4 million. Management recognizes
that the Company's continued existence is dependent upon its ability to obtain
needed working capital through additional equity and/or debt financing and
revenue to cover expenses as the Company continues to incur losses.
 
 The
Company's business is subject to the risks of its oil and gas investments in
South America. The likelihood of success of the Company must be considered in
light of the expenses, difficulties, delays and unanticipated challenges
encountered in connection with the operations of the oil and gas concession in
Argentina. There is no assurance the Company will ultimately achieve a
profitable level of operations.
 
 The
Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations. The Company's continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and achieve a level of oil and gas revenue adequate
to support its cost structure. Management is actively seeking additional capital
to ensure the continuation of its current activities and complete its proposed
activities. However, there is no assurance that additional capital will be
obtained or that the Company’s investments will be profitable. These
uncertainties raise substantial doubt about the ability of the Company to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of these
uncertainties should the Company be unable to continue as a going
concern.
 
 PRINCIPLES
OF CONSOLIDATION
 
 The
Company's financial statements include the accounts of all majority-owned
subsidiaries where its ownership is more than 50 percent of the common
stock. The consolidated financial statements also include the accounts of any
Variable Interest Entities ("VIEs") where the Company is deemed to be the
primary beneficiary, regardless of its ownership percentage. All significant
intercompany balances and transactions with consolidated subsidiaries are
eliminated in the consolidated financial statements. Where the Company's
ownership interest is less than 100 percent, the minority ownership interests
are reported in the consolidated balance sheets as a liability. The minority
ownership interest of the Company's earnings or loss, net of tax, is classified
as "Minority interest share of income (loss) of consolidated subsidiaries" in
the consolidated statement of operations.
  25
 
 USE OF
ESTIMATES
 
 The
preparation of consolidated financial statements in conformity with
 accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those
estimates.
 
 EARNINGS
(LOSS) PER SHARE
 
 Basic
earnings (loss) per common share are computed by dividing net earnings by the
weighted average number of common shares outstanding during the year. Diluted
earnings (loss) per share are computed by dividing net earnings (loss) by the
weighted average number of common shares and potential common shares outstanding
during the period. As the Company experienced a loss during the year ended
December 31, 2008, potential common shares are excluded from the loss per share
calculation because the effect would be antidilutive. Potential common shares
relate to the convertible debt and stock options. As of December 31, 2008, there
were 2,749,920 potential common shares related to convertible debt and 3,500,000
common shares related to stock options.
 
 REVENUE
RECOGNITION
 
 The
Company recognized revenue from the results of its investment portfolio as the
difference between proceeds from the sale of securities and their acquisition
cost, less commissions paid to the firm that conducts the securities
transactions. The Company was in the business of trading securities and gains
and losses from the sale of securities are included in the Company’s
consolidated statement of operations.
 
 EVALUATION
OF LONG-LIVED ASSETS
 
 The
Company reviews property and equipment, finite-lived intangible assets and
investments in nonconsolidated affiliates for impairment whenever events or
changes in circumstances indicate the carrying value may not be recoverable in
accordance with guidance in Statement of Financial Accounting Standards (SFAS)
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." If the
carrying value of the long-lived asset exceeds the present value of the related
estimated future cash flows, the asset would be adjusted to its fair value and
an impairment loss would be charged to operations in the period identified.
Because the Company discontinued its operations in the Far East (Indonesia) as
of the quarter ended June 30, 2008 and discontinued its construction technology
activities as of the quarter ended December 31, 2008, the fixed assets and
intangible assets related to these operations were evaluated for impairment.
Based on the results of that analysis, the Company recorded a $467,995
impairment charge related to these assets during the year ended December 31,
2008.
  26
 
 DEPRECIATION
AND AMORTIZATION
 
 Property
and equipment are stated at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of the related
assets.
 
 INVESTMENTS
 
 At
acquisition, marketable debt and equity securities are designated as trading
securities which are carried at estimated fair value with unrealized gains and
losses reflected in results of operations.
 
 EQUITY
METHOD INVESTMENTS
 
 The
Company accounts for non-marketable investments using the equity method of
accounting if the investment gives it the ability to exercise significant
influence over, but not control of, an investee. Significant influence generally
exists if there is an ownership interest representing between 20% and 50% of the
voting stock of the investee. Under the equity method of accounting, investments
are stated at initial cost and are adjusted for additional investments and their
proportionate share of earnings or losses and distributions. The Company records
its share of the investee’s earnings or losses in earnings (losses) from
unconsolidated entities, net of income taxes, in its consolidated statement of
operations. Equity investments of less than 20% are stated at cost. The cost is
not adjusted for its proportionate share of earnings or losses. The Company
evaluates its equity method investments for impairment when events or changes in
circumstances indicate, in management’s judgment, that the carrying value of
such investments may have experienced an other-than-temporary decline in value.
When evidence of loss in value has occurred, the Company compares fair value of
the investment to its carrying value to determine whether impairment has
occurred. If the estimated fair value is less than the carrying value and
management considers the decline to be other than temporary, the excess of the
carrying value over the estimated fair value is recognized as impairment in the
consolidated financial statements.
 
 STOCK-BASED
COMPENSATION
 
 The
Company has a stock-based compensation plan under which stock options are
granted to employees. The Company accounts for stock-based compensation under
Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment."
 
 INCOME
TAXES
 
 The
Company accounts for income taxes using an asset and liability approach under
which deferred taxes are recognized by applying enacted tax rates applicable to
future years to the differences between financial statement carrying amounts and
the tax basis of reported assets and liabilities. The principal item giving rise
to deferred taxes are future tax benefits of certain net operating loss
carryforwards.
  27
 
 FOREIGN
CURRENCY TRANSLATION
 
 The
functional currency for some foreign operations is the local currency. Assets
and liabilities of foreign operations are translated at balance sheet date rates
of exchange and income, expense and cash flow items are translated at the
average exchange rate for the period. The functional currency in South America
is the U.S. dollar. Translation adjustments are recorded in Cumulative
Other Comprehensive Income. The translation gains or losses were not material
for the years ended December 31, 2008 and 2007 and there were no adjustments to
Cummulative Other Comprehensive Income.
 
 POLITICAL
RISK
 
 The
Company is exposed in the inherent risks for the foreseeable future of
conducting business internationally. Language barriers, foreign laws and tariffs
and taxation issues all have a potential effect on he Company’s ability to
transact business. Political instability may increase the difficulties and costs
of doing business. Accordingly, events resulting from changes in the political
climate could have a material effect on the Company.
 
 
 INTANGIBLES
 
 SFAS No.
142, "Goodwill and Other Intangible Assets," specifies the financial accounting
and reporting for acquired goodwill and other intangible assets. Goodwill and
intangible assets deemed to have indefinite useful lives are not amortized but
are subject to, at a minimum, an annual impairment test. If the carrying value
of goodwill or intangible assets exceeds its fair market value, an impairment
loss would be recorded.
 
 DISCONTINUED
OPERATIONS
 
 During
the quarter ended June 30, 2008, the Company discontinued all its
operations in the Far East (Indonesia). During the quarter ended December 31,
2008, the Company discontinued all of its construction technology activities
that were carried out by its wholly owned subsidiary, Delta Technologies, Inc.
and the trading of securities by its South American Hedge Fund subsidiary. These
discontinued operations resulted in a gain (loss) of $(2,310,473) and $341,556
for the years December 31, 2008 and 2007, respectively.
 
 Summarized
statement of loss for discontinued operations is as follows:
  28
 
 Years Ended December 31,2008
                              
                              
                              2007Net
      sales
                              
                              $
                              (2,077,576
                              )
                              
                              $
                              341,556Impairment
                              
                              
                              (467,994
                              )
                              
                              
                              —Provision
      for income taxes
                              
                              
                              —
                              
                              
                              
                              —Loss
      from operations, net of tax
                              
                              
                              —
                              
                              
                              
                              —Gain
      on disposition of minority interests
                              
                              
                              230,057
                              
                              
                              
                              —Provision
      for income taxes
                              
                              
                              —
                              
                              
                              
                              —Loss
      from discontinued operations, net of tax
                              
                              $
                              (2,310,473
                              )
                              
                              $
                              341,556
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
  For
financial instruments including cash, accounts payable, accrued expenses, notes
payable and convertible debt, it was assumed that the carrying amount
approximated fair value because of the short maturities of such
instruments.
 
 NEW
FINANCIAL ACCOUNTING STANDARDS
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
enhances existing guidance for measuring assets and liabilities using fair
value.  This Standard provides a single definition of fair value,
together with a framework for measuring it, and requires additional disclosure
about the use of fair value to measure assets and liabilities. In February 2008,
the FASB issued FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to
SFAS No. 13 and its “Related Interpretive Accounting Pronouncements that Address
Leasing Transactions,” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2,
“Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes
SFAS No. 13 and its related interpretive accounting pronouncements that address
leasing transactions from the requirements of SFAS No. 157, with the exception
of fair value measurements of assets and liabilities recorded as a result of a
lease transaction but measured pursuant to other pronouncements within the scope
of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective
for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 4 of
Notes to Consolidated Financial Statements for disclosures related to the
Company’s financial assets accounted for at fair value on a recurring or
nonrecurring basis. The Company will provide the additional disclosure required
relating to the fair value measurement of nonfinancial assets and nonfinancial
liabilities when it completes its implementation of SFAS No. 157 on January
2009, as required, and does not believe they will have a significant impact on
its financial statements.
  29
 
 In
February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option
for Financial Assets and Financial Liabilities,” providing companies with an
option to report selected financial assets and liabilities at fair
value.  The Standard’s objective is to reduce both complexity in
accounting for financial instruments and the volatility in earnings caused by
measuring related assets and liabilities differently.  It also
requires entities to display the fair value of those assets and liabilities for
which the Company has chosen to use fair value on the face of the balance
sheet.  SFAS 159 is effective for fiscal years beginning after
November 15, 2007. The adoption of SFAS No. 159 on January 1, 2008 did not have
a material impact on the Company’s financial statements.
 
 In June
2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3,
"Accounting for Nonrefundable Advance Payments for Goods or Services Received
for Use in Future Research and Development Activities," which is effective for
calendar year companies on January 1, 2008.  The Task Force concluded
that nonrefundable advance payments for goods or services that will be used or
rendered for future research and development activities should be deferred and
capitalized.  Such amounts should be recognized as an expense as the
related goods are delivered or the services are performed, or when the goods or
services are no longer expected to be provided. EITF Issue No. 07-3 did not
impact the Company’s financial statements.
 
 In
December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business
Combinations.” This Statement is intended to improve the relevance, completeness
and representational faithfulness of the information provided in financial
reports about the assets acquired and the liabilities assumed in a business
combination.  This Statement requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the Statement. Under SFAS 141(R),
acquisition-related costs, including restructuring costs, must be recognized
separately from the acquisition and will generally be expensed as incurred. That
replaces SFAS 141’s cost-allocation process, which required the cost of an
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values. SFAS 141(R) shall be applied
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual report period beginning on or after
December 15, 2008. The Company will implement this Statement in
2009.
  30
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 62 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States.  This Statement is effective sixty days following
the SEC’s approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles.”  The Company is currently evaluating
the potential impact, if any, of the adoption of SFAS No. 162 on its financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 establishes new accounting and reporting standards
for the non-controlling interest in a subsidiary and for the deconsolidation of
a subsidiary. Specifically, this statement requires the recognition of
non-controlling interests (minority interest) as equity in the consolidated
financial statements and separate from parent’s equity. The amount of net income
attributable to the non-controlling interest will be included in consolidated
net income on the face of the income statement.  SFAS 160 clarifies
that changes in a parent’s ownership in a subsidiary that does not result in
deconsolidation are equity transactions if the parent retains its controlling
financial interest. In addition, this statement requires that a parent recognize
a gain or loss in net income when a subsidiary is deconsolidated. Such gain or
loss will be measured using the fair value of the non-controlling equity
investment of the deconsolidation date. SFAS 160 also includes expanded
disclosure requirements regarding the interest of the parent and its
non-controlling interest. SFAS 160 is effective for fiscal years, and interim
periods other than fiscal years, beginning on or after December 15,
2008.  The adoption of SFAS 160 does not expect to have a material
impact on the Company’s Consolidated Balance Sheet.
 
 2.
ACQUISITION
 
 Effective
March 4, 2008, the Company entered into a Membership Interest Purchase
Agreement, pursuant to which the Company acquired from Egani, Inc. all the
shares of stock of Altony SA, an Uruguayan Sociedad Anonima (“Altony”), which
owns 100% of the issued and outstanding membership interests in South American
Hedge Fund LLC, a Delaware limited liability company (sometimes referred to as
“SAHF”). At the closing of the Agreement, the Company issued 130,000,000 shares
of its common stock to Egani, Inc. which constituted, following such issuance, a
majority of the outstanding shares of its common stock. Immediately following
the closing of the Agreement, Altony became a wholly owned subsidiary of the
Company. For accounting purposes, the transaction was treated as a
recapitalization of the Company, as of March 4, 2008, with Altony as the
acquirer.
  31
 
 The
acquired assets and liabilities assumed of Delta Mutual from the reverse
acquisition are as follows:
 
 Cash
                          
                          $
                          57,623Prepaid
      expenses
                          
                          
                          1,914Property
      and equipment
                          
                          
                          462,842Accumulated
      depreciation
                          
                          
                          (94,719
                          )Intangible
      asset-net
                          
                          
                          126,317Other
      assets
                          
                          
                          650Accounts
      payable
                          
                          
                          (173,370
                          )Accrued
      expenses
                          
                          
                          (1,225,674
                          )Convertible
      debt
                          
                          
                          (397,340
                          )Notes
      payable
                          
                          
                          (240,655
                          )Minority
      interests
                          
                          
                          (225,797
                          )Common
      stock
                          
                          
                          (7,888
                          )Deficit
                          
                          
                          1,716,087$
                          -0-
 
 3.
INVESTMENTS
 
 Trading
securities are comprised of public and private securities of Latin American
entities. For the years ended December 31, 2008 and 2007, the Company incurred
realized gains (losses) of $(2,072,536) and $342,056, respectively. Net gains
for the year ended December 31, 2007, include $28,417 of unrealized gains. The
fair market value of these investments as of December 31, 2008 and 2007 is
indicated below:
 
 December 31,2008
                        
                        
                        2007Public
      securities
                        
                        $
                        —
                        
                        
                        $
                        322,463Private
      securities
                        
                        
                        —
                        
                        
                        
                        4,386,557$
                        —
                        
                        
                        $
                        4,709,020
 
 4.
PROPERTY AND EQUIPMENT
  32
  
 December 31,2008
                      
                      
                      2007Equipment
                      
                      $
                      6,277
                      
                      
                      $
                      —Leasehold
      improvements
                      
                      
                      7,807
                      
                      
                      
                      —14,084
                      
                      
                      
                      —Less
      accumulated depreciation
                      
                      
                      13,280
                      
                      
                      
                      —$
                      804
                      
                      
                      $
                      —
 
 During
2008, the Company discontinued its operations in the Far East (Indonesia) and
discontinued its construction technology activities. During the third and fourth
quarters of 2008, the Company wrote off $268,127, the value of the equipment
that was used in its Indonesian operations. During the fourth quarter of 2008,
the Company wrote off $77,125, the value of the manufacturing equipment that was
used to produce its insulating concrete form (ICF) building
product.
 
 Depreciation
expense for the years ended December 31, 2008 and 2007 amounted to $22,066 and
$-0-, respectively.
 
 5.
INTANGIBLE ASSETS
 
 Intangible
assets consisted of intellectual property from a patent application. The Company
elected not to pursue the patent application and recorded an impairment charge
of $122,742 of the unamortized amounts during the quarter ended June 30, 2008.
Amortization expense was $3,575 and $-0-, for the years ended December 31, 2008
and 2007, respectively. Intangible assets consisted of the
following:
 
 December 31,2008
                      
                      
                      2007Gross
      Carrying Amount
                      
                      $
                      143,000
                      
                      
                      $
                      —Accumulated
      Amortization
                      
                      
                      143,000
                      
                      
                      
                      —Intellectual
      property costs
                      
                      $
                      —
                      
                      
                      $
                      —
 
 6.
INVESTMENT IN NONCONSOLIDATED AFFILIATES
 
 The
Company has a 23.5% ownership interest in the Jollin and Tonono oil and gas
concessions located in Northern Argentina. During 2007, the Company purchased a
47% ownership of these concessions and paid the purchase price by issuing a
non-interest bearing note in the principal amount of $1,820,000 to
Oxipetrol-Petroleros de Occidente S.A. (Oxipetrol), one of the other owners,
with a maturity date of July 2008. The Company’s purchase price was based upon
the price tendered by the original purchasers of the concessions that was and
accepted by the Argentine government, who formerly owned these properties.
The government uses a number of factors In determining the selling prices
for oil and gas concession in Argentina, including the location and size of the
concession and the current market prices of crude oil and natural gas. Prior to
the maturity date, the Company and Oxipetrol mutually agreed to reduce the
principal amount of the Company’s note primarily because of changes in oil and
gas prices. Based upon the purchase price reduction, the Company repaid
Oxipetrol $1,270,000 at the maturity date. Based on these circumstances, the
Company recorded a one time, retroactive adjustment, reducing the value of this
investment by $550,000 at December 31, 2008.
  33
 
 During
2008, the Company exchanged 50% of its ownership in this investment with a third
party for no cash consideration, however, the acquirer contractually agreed to
assume 50% of the Company’s obligations with respect to future development
expenses. The Company recorded a $635,000 loss on disposition of this investment
in its consolidated statement of operations.
 
 During
the year ended December 31, 2008, majority owners of the Jollin and Tonono
concessions formed an Argentine-registered joint venture and paid, in the
aggregate, approximately $848,00 of development costs, all of which were
capitalized. Since the Company is not currently registered as a foreign company
in Argentina, it could not become a member of the joint venture in 2008. The
other owners of these concessions have agreed that, upon admission of the
Company as a member of the joint venture, the Company will retain its 23.5%
ownership. However, the Company’s weighted average pro-rata portion of the 2008
aggregate development cost, of approximately $223,024, all of which is included
in accounts payable in the Company’s consolidated balance sheet at December 31,
2008, will be repaid to the other members from its pro-rata share of the future
earnings. The Company has applied for foreign registration in Argentina and
expects to be admitted as a member of the joint venture during
2009.
 
 Currently,
there is a producing oil well in operation at the Tonono Concession. This well
also contains natural gas and can begin production upon completion of a pipeline
to a nearby refinery that is currently in the pre-construction phase. If the
anticipated oil and gas revenue does not offset the development costs for these
concession in 2009 and beyond, or is not sufficient to repay the Company’s
obligation to the other owners, the Company’s share of the development and
operating expenses will be borne by the other owners subject to the repayment
method described above.
 
 During
2008, the Company purchased 40% of the oil and gas exploration rights to five
geographically defined areas in the Salta Province of Northern Argentina from
Kestal, SA, a company that acquired 100% of these explorations rights from the
government of Argentina in 2007. Kestal retained a 60% interest. The price
Kestal paid to acquire these rights from the government was determined by the
process described above. The Company paid the $697,000 purchase price in cash
and incurred no additional costs or expenses related to this investment in 2008.
The Company expects that in 2009 and 2010, substantially all of the exploration
costs required to retain these exploration rights will be borne by the majority
owner.
  34
 
 The
Company has 9% ownership of the Tartagal and Morillo oil and gas
concessions located in Northern Argentina. During 2007, the Company purchased an
18% ownership of these concessions and paid the purchase price by issuing a
non-interest bearing note in the principal amount of $480,000 to Oxipetrol, one
of the other owners, with a maturity date of July 2008. The purchase price for
this investment was based on the original price paid to the Argentine government
to acquire these concessions, following the process described above. Prior to
the maturity date, the Company and Oxipetrol mutually agreed to reduce the
principal amount of the Company’s note primarily because of changes in oil and
gas prices. Based upon the purchase price reduction, the Company repaid
Oxipetrol $450,000 at the maturity date. Based on these circumstances, the
Company recorded a one time, retroactive adjustment reducing the value of this
investment by $30,000 at December 31, 2008.
 
 During
2008, the Company exchanged 50% of its ownership in this investment with a third
party for no cash consideration, however, the acquirer contractually agreed to
assume 50% of the Company’s obligations with respect to future development
expenses. The Company recorded a $225,000 loss on disposition of this investment
in its consolidated financial statements.
 
 In March
2009, a Chinese company purchased 60% of the ownership in the Tartagal and
Morillo Concessions, from the other majority owners, for total consideration of
approximately $270 million. These funds will be used for development and
operating expenses in 2009 and beyond.
 
 The
Company evaluated these investments for impairment and concluded that, except as
described above, no loss in value occurred as of December 31, 2008. The
following table summarizes the Company’s investments in these nonconsolidated
affiliates.
 
 Concession
                    
                    
                    ExplorationInvestments
                    
                    
                    Rights
                    
                    
                    TotalAt
      December 31, 2007
                    
                    $
                    2,300,000
                    
                    
                    $
                    —
                    
                    
                    $
                    1,820,000Adjustment
      of purchase price
                    
                    
                    (580,000
                    )
                    
                    
                    —
                    
                    
                    
                    (580,000
                    )Disposition
      of investment, net
                    
                    
                    (860,000
                    )
                    
                    
                    —
                    
                    
                    
                    (860,000
                    )Additional
      investment in 2008
                    
                    
                    223,024
                    
                    
                    
                    697,000
                    
                    
                    
                    920,024Equity
      in net earnings (loss)
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —At
      December 31, 2008
                    
                    $
                    1,083,024
                    
                    
                    $
                    697,000
                    
                    
                    $
                    1,708,024
 
 7.
INVESTMENT IN JOINT VENTURES
 
 During
2008, the Company discontinued its operations in the Far East (Indonesia) and
the operations of its Puerto Rico real estate development partnerships. For the
year ended December 31, 2008, the Company wrote off all balances in connection
with these joint ventures and recorded a gain on the disposal of the
discontinued operations of approximately $230,057, which is included in
discontinued operations on the Company’s consolidated statement of
operations.
  35
 
 The
Company continues to maintain a 45% interest in Delta-Envirotech, Inc. which
meets the definition of a Variable Interest Entity as defined in Financial
Accounting Standards Board Interpretation No. 46 (FIN 46),"Consolidation of
Variable Interest Entities" requiring the beneficiaries of a variable interest
entity to consolidate the entity. The primary beneficiary of a variable interest
entity is the party that absorbs
the majority of the expected losses of the entity or receives a majority of the
entity's expected residual return, or both, as a result of ownership,
contractual or other financial interest in the entity.
 
 8.
SHORT-TERM DEBT
 
 December
      31,2008
                                
                                
                                2007Notes
      payable to three investors, interest at 8%, due November 6,2008
      (1)
                                
                                $
                                150,655
                                
                                
                                $
                                —Note
      payable to third party, interest at 6%, due April 2009
                                
                                
                                30,000
                                
                                
                                
                                —Note
      payable to Oxipetrol-Petroleres de Occidenete, S.A., non-interest bearing,
      paid July 2008
                                
                                
                                —
                                
                                
                                
                                2,300,000Notes
      payable to stockholders, interest at 6%, due April 2009 or
                                
                                
                                280,553
                                
                                
                                
                                —on
      demand$
                                461,208
                                
                                
                                $
                                2,300,000
 
 (1)The
Company did not repay the notes at the maturity date. The Company is currently
negotiating amended terms with the noteholders. If the Company and the
noteholders can not agree upon an amendment to the note, including an extension
of the maturity date, the Company may receive a notice of default. If the
Company receives a notice of default and fails to repay the notes, the lenders
could initiate legal proceedings and obtain a judgement against the
Company.
 
 Interest
expense for the years ended December 31, 2008 and 2007 amounted to $(21,545) and
$-0-, respectively. Accrued interest at December 31, 2008 and 2007 amounted to
$24,370 and $-0-, respectively and is included in accrued expenses on the
Company’s consolidated balance sheet.
  36
    In
connection with the March 4, 2008 merger, the Company assumed convertible debt
obligations of $397,340. A note in the principal amount of $193,740 was not
repaid at its maturity date. The Company is currently negotiating amended terms
with the noteholder. If the Company and the noteholder can not agree upon an
amendment to the note, including an extension of the maturity date, the Company
may receive a notice of default. If the Company receives a notice of default and
fails to repay the note, the lender could initiate legal proceedings and
obtain a judgement against the Company.
 
 In April
2008, the Company issued 2,300,571 shares of common stock in payment of the
aggregate principal amount of $143,600 of convertible notes and issued 115,634
shares of common stock in payment of the accrued interest of
$7,048.
 
 At
December 31, 2008, the Company's outstanding convertible notes were convertible
into 2,749,920 shares of common stock.
 
 The
following table shows the maturities by year of total face amount of the
convertible debt obligations at December 31, 2008:
  2009
                  
                  $
                  253,740$
                  253,740
 
 For the
year ended December 31, 2008, the Company recorded interest expense of $7,750.
As of December 31, 2008, accrued interest of $42,275 is included in accrued
expenses on the Company's consolidated balance sheet.
 
 10.
ACCRUED EXPENSES
 
 Accrued
expenses consists of the following:
 
 December 31,2008
                          
                          
                          2007Professional
      fees
                          
                          $
                          33,000
                          
                          
                          $
                          —Interest
      expense
                          
                          
                          66,644
                          
                          
                          
                          —Payroll
      expense
                          
                          
                          644,508
                          
                          
                          
                          —Payroll
      expense-officers
                          
                          
                          50,296
                          
                          
                          
                          —Payroll
      tax expense
                          
                          
                          45,481
                          
                          
                          
                          —Accrued
      consulting fees
                          
                          
                          419,877
                          
                          
                          
                          —Other
      accrued expenses
                          
                          
                          103,589
                          
                          
                          
                          —$
                          1,363,395
                          
                          
                          $
                          —
 
 During
the year ended December 31, 2008, pursuant to a written agreement with the
former president of the Company, $117,436 of his accrued salary was
eliminated.
  37
    The
Company issues shares of common stock for services and repayment of debt and
interest valued at fair market value at time of issuance.
 
 a.              For
the year ended December 31, 2008, the Company issued 2,300,571 shares of common
stock upon the conversion of convertible notes in the principal amount of
$143,600, valued at $0.05 - $0.07 per share; and issued 115,634 shares of common
stock for payment of accrued interest in the amount of $7,048, valued at $0.05 -
$0.07 per share.
 
 b.              For
the year ended December 31, 2008, the Company issued 10,550,000 shares of common
stock for services valued at $238,500, valued at $0.02 - $0.07 per
share.
 
 12.   BUSINESS
SEGMENT INFORMATION
 
 The
Company’s reporting business segments are geographic and
include   North America (United States) and South America. The
primary criteria by which financial performance is evaluated and resources
allocated are revenue and operating income.
 
 The
following is a summary of key financial data:
 
 YearsEnded
      December 31,2008
                                          
                                          
                                          2007Total
      Revenue:United
      States
                                          
                                          $
                                          43,365
                                          
                                          
                                          $
                                          —South
      America
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —$
                                          43,365
                                          
                                          
                                          $
                                          —Income
      (Loss) from Continuing Operations:United
      Sates
                                          
                                          $
                                          (1,413,836
                                          )
                                          
                                          $
                                          —South
      America
                                          
                                          
                                          (860,000
                                          )
                                          
                                          
                                          —$
                                          (2,227,836)
                                          
                                          
                                          $
                                          —Long-lived
      Assets:United
      States
                                          
                                          $
                                          1,454
                                          
                                          
                                          $
                                          —South
      America
                                          
                                          
                                          1,780,024
                                          
                                          
                                          
                                          2,300,000$
                                          1,781,478
                                          
                                          
                                          $
                                          2,300,000Capital
      Expenditures:United
      States
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          —South
      America
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —Depreciation
      and Amortization:United
      States
                                          
                                          $
                                          25,066
                                          
                                          
                                          $
                                          —South
      America
                                          
                                          
                                          —
                                          
                                          
                                          
                                          —$
                                          25,066
                                          
                                          
                                          $
                                          —
  38
 
 13.   INCOME
TAXES
 
 The
Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the
implementation of FIN 48, the Company recognized no adjustment in the net
liability for unrecognized income tax benefits.
 
 During
the year ended December 31, 2008, the Company recorded a deferred tax asset
associated with its net operating loss ("NOL") carryforwards of approximately
$4,430,000 that was fully offset by a valuation allowance due to the
determination that it was more likely than not that the Company would be unable
to utilize these benefits in the foreseeable future. The Company's NOL
carryforward expires beginning in 2010 through 2017.
 
 The types
of temporary differences between tax basis of assets and liabilities and their
financial reporting amounts that give rise to the deferred tax liability and
deferred tax asset and their approximate tax effects are as
follows:
 
 For the Year EndedDecember 31, 2008Temporary
                              
                              
                              TaxDifference
                              
                              
                              EffectGross
      deferred tax asset:United
      States net operating loss carryforward
                              
                              $
                              2,340,000
                              
                              
                              $
                              796,000Foreign
      net operating loss carryforward
                              
                              
                              2,090,000
                              
                              
                              
                              710,000Valuation
      allowance
                              
                              
                              (4,430,000
                              )
                              
                              
                              (1,506,000
                              )Net
      deferred income tax asset
                              
                              $
                              —
                              
                              
                              $
                              —
  39
 
 The
reconciliation of the effective income tax rate to the federal statutory rate is
as follows:
 
 Years ended December 31,2008
                          
                          
                          2007Total
      provision computed at the Federal statutory rate
                          
                          $
                          (1,558,700
                          )
                          
                          $
                          (116,100
                          )Increase
      (decrease) in taxes resulting from:Effect
      of unused operating losses
                          
                          
                          1,558,700
                          
                          
                          
                          —Permanent
      foreign difference
                          
                          
                          —
                          
                          
                          
                          (116,100
                          )$
                          —
                          
                          
                          $
                          —
 
 The
Company paid no taxes in 2007 on their operating profit due to
its  tax exempt status in Uruguay.
 
 14. SHARE
BASED COMPENSATION
  The
Company records compensation expense in its consolidated statement of operations
related to employee stock-based options and awards in accordance with SFAS No.
123(R) "Share-Based Payment."
 
 The
Company recognizes the cost of all employee stock options on a straight-line
attribution basis over their respective contractual terms, net of estimated
forfeitures. The Company has selected the modified prospective method of
transition.
 
 The
Company also issues shares of its common stock to non-employees as stock-based
compensation. The Company accounts for the services using the fair market value
of the services rendered. For the year ended December 31, 2008, the Company
issued and 10,550,000 shares, and recorded compensation expense of $238,500 in
conjunction with the issuance of these shares.
 
 Stock
Option Plan
 
 In
conjunction with the March 4, 2008 merger, the Company assumed the obligation of
7,978,000 outstanding stock options at their fair value. As of December 31,
2008, 6,500,000 shares of common stock remain available for issuance under the
stock option plan.
 
 A summary
of the status of the Company's options and stock awards under its stock option
plan as of December 31, 2008 and changes during the year then ended, is
presented below.
  40
 
 2008
                        
                        
                        2007Shares
                        
                        
                        Weighted-AverageExercise
      SharePrice
                        
                        
                        Shares
                        
                        
                        Weighted-AverageExercise
      SharePriceOptions
      outstanding beginning of year
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        -Options
      granted
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        -Optionsassumed
      from acquisition
                        
                        
                        7,978,000
                        
                        
                        $
                        0.11Options
      exercised
                        
                        
                        -
                        
                        
                        $
                        -
                        
                        
                        
                        -
                        
                        
                        $
                        -Options
      cancelled/expired
                        
                        
                        (4,478,000
                        )
                        
                        $
                        0.11
                        
                        
                        
                        -
                        
                        
                        $
                        -Options
      outstanding - end of year
                        
                        
                        3,500,000
                        
                        
                        $
                        0.11
                        
                        
                        
                        -
                        
                        
                        $
                        -Option
      Price Range at End of Year
                        
                        $
                        0.11Option
      price range for exercised shares
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        -Options
      available for grant at end of year
                        
                        
                        3,500,000
                        
                        
                        
                        
                        
                        
                        
                        -Weighted
      - average fair value of options granted during the year
                        
                        $
                        —
                        
                        
                        
                        
                        
                        
                        $
                        —
 
 Stock
compensation expense applicable to stock options for the year ended December 31,
2008 was approximately $787,000. The aggregate intrinsic value of options
outstanding as of December 31, 2008 was $(245).
 
 The
following table summarizes information about fixed price stock options
outstanding at December 31, 2008.
 
 Range of
                            
                            Number
                            
                            
                            Weighted-Average
                            
                            
                            Weighted-
                            
                            
                            Number
                            
                            
                            Weighted-Exercise
                            
                            Outstanding
                            
                            
                            Remaining
                            
                            
                            Average
                            
                            
                            Exercisable
                            
                            
                            AveragePrice
                            
                            December
      31,
                            
                            
                            Contractual
                            
                            
                            Exercise
      Price
                            
                            
                            December
      31,
                            
                            
                            Exercise2008
                            
                            
                            Life
                            
                            
                            
                            
                            
                            2008
                            
                            
                            Price$0.11
                            
                            
                            3,500,000
                            
                            
                            
                            2.5
                            
                            
                            $
                            0.11
                            
                            
                            
                            7,978,000
                            
                            
                            $
                            0.11
 
 All of
the Company’s outstanding options were exercisable as of December 31,
2008.
 
 At
December 31, 2008, there was $622,290 of total unrecognized compensation cost
related to share-based compensation arrangements granted under the stock option
plan. The cost is expected to be recognized over a weighted average period of
2.5 years.
  41
 
 15.
COMMITMENTS AND CONTINGENCIES
 
 a.   Executive
Employment Agreements
 
 The
Company has an employment agreement with its chief financial officer and had an
employment agreement with its former president and CEO.
 
 Peter F.
Russo, the Company’s former president and CEO, resigned effective July 25, 2008.
In conjunction with his resignation, Mr. Russo agreed to waive all of his
accrued salary for the period prior to July 2004 in exchange for a cash payment
from a stockholder. As of December 31, 2008, the Company had accrued salary
liability to Mr. Russo of $48,750, which is included in accrued expenses on the
Company's consolidated balance sheet.
 
 The
Company has an employment agreement with Martin G. Chilek, its chief financial
officer. This agreement was renewed for an addition 12-month period on March 3,
2009. If Mr. Chilek's employment is terminated other than for "cause," or his
employment agreement is not renewed by the Company, his base salary is continued
for six months following his termination. The agreement also contains a
provision for additional compensation if his employment is terminated without
"cause" following a change in control. As of December 31, 2008, there was
$50,296 of accrued salary liability to Mr. Chilek, which is included in accrued
expenses on the Company’s consolidated balance sheet.
 
 b.   Consulting
Agreements
 
 The
Company had two consulting agreements that had been terminated or expired during
the year ended December 31, 2008.
 
 As of
December 31, 2008, consulting fees of $419,877 are included in accrued expenses
on the Company's consolidated balance sheet.
 
 c.
Leases
 
 The
Company’s lease for its principal office space in Arizona became effective in
February 2009 for a period of 24 months. The Company’s Pennsylvania office
lease was amended in 2008 and is currently on a month-to-month basis.
Delta-Envirotech has a month-to-month lease for office space in
Virginia.
 
 Future
minimum lease payments are as follows:
 
 Year
      ending December 31,2009
                                  
                                  $
                                  28,5902010
                                  
                                  
                                  5,718$
                                  34,308
 
 For the
year ended December 31, 2008, rent expense was $31,800.
  42
 
 16. LEGAL
PROCEEDINGS
 
 On
September 16, 2008, the Company was notified of a complaint filed with the
Pennsylvania Department of Labor & Industry by its former President and CEO
alleging non-payment of wages in the amount of $53,271. The Company also
received notice of a similar complaint filed by a former employee alleging
non-payment of wages in the amount of $17,782. In October 2008, the Company
entered into repayment agreements with both of the former employees. The Company
has not made any payments to these two former employees pursuant to the
agreements. The Company believes the resolution of this matter will not have a
material effect on the Company or its operations.
 
 On
February 5, 2009, the Company was notified that it was named as a co-defendant
in a citation corporate filed in the District Court in Harris County, Texas in
November 2007, by Equisource Ventures. The suit alleges breach of contract and
unjust enrichment, and the plaintiff seeks actual and exemplary damages for
unpaid consulting fees, attorneys’ fees, other costs and interest. The Company
denies any wrongdoing and will contest vigorously the claims asserted against
it. The Company also believes that the resolution of this matter will have no
material effect upon the Company or its operations.
  17.  SUBSEQUENT
EVENTS
 
 a.
                During
      the first quarter of 2009, the Company borrowed $61,980 from a
      stockholder, a related party, and an officer of the Company, pursuant to
      6% promissory notes, payable upon written demand by the
      lenders.
 
 b.
                During
      April 2009, the Company borrowed $14,987 from a related party pursuant to
      a 6% promissory note, payable upon written demand by the
      lender.




43




Item
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure.


None.




Item
9A (T). Controls and Procedures.





As
supervised by our board of directors and our chief executive and principal
financial officers, management has established a system of disclosure controls
and procedures and has evaluated the effectiveness of that
system.  The system and its evaluation are reported on in the below
Management's Annual Report on Internal Control over Financial
Reporting.  Our chief executive and financial officer have concluded
that our disclosure controls and procedures (as defined in the 1934 Securities
Exchange Act Rule 13a-15(e)) as of December 31, 2008, are effective, based on
the evaluation of these controls and procedures required by paragraph (b) of
Rule 13a-15.





Management's
Annual Report on Internal Control over Financial Reporting





Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934 (the "Exchange Act").  Internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. generally
accepted accounting principles.





Management
assessed the effectiveness of internal control over financial reporting as of
December 31, 2008. We carried out this assessment using the criteria of the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated Framework. Management concluded in this assessment
that as of December 31, 2008, our internal control over financial reporting is
effective.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by our
registered public accounting firm, pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management's report in
this annual report.





There
have been no significant changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
during the fourth quarter of 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




Item
9B. Other Information.





None.


44


PART
III




Item
10. Directors, Executive Officers, and Corporate Governance.





DIRECTORS
AND EXECUTIVE OFFICERS





As of the
date of this report, the executive officers and director of Delta Mutual, Inc.
were as follows:





NAME
                      
                      AGE
                      
                      TITLE(S)Daniel
      R. Peralta
                      
                      55
                      
                      President,
      CEO and DirectorMalcolm
      W. Sherman
                      
                      73
                      
                      Executive
      Vice President and DirectorMartin
      G. Chilek
                      
                      58
                      
                      Sr.
      Vice President, ChiefFinancial
      Officer, Treasurer and
Secretary





Daniel R.
Peralta joined the Company on January 20, 2009 as President and CEO and a
director. Dr. Peralta is also President and a director of Egani, Inc., a
financial and international business consulting firm. He also serves as
President and a director of Egani S.A., an affiliated company. Since July of
2008, Dr. Peralta has served as an advisor to the Company’s wholly owned
subsidiary, South American Hedge Fund, for its oil and gas activities in
Argentina. He has also served in various advisory capacities to the Argentine
government and as a board member of the Central Bank of Argentina and Vaisala oy
Finland-Argentina. He is the author of several publications on finance and
economic development in South America. Dr. Peralta received a doctoral degree in
business administration from Belgrano University (Buenos Aires, Argentina) and a
bachelor’s degree in aeronautical engineering form the National
Technical


University
of Argentina.





Malcolm
W. Sherman was appointed to fill a vacancy on our board of directors on July 11,
2008. He was appointed Executive Vice President on July 28, 2008. Mr. Sherman
also serves as President and a director of Security Systems International, Inc.,
a company that provides security systems for government building, industrial
facilities, oil refineries and other facilities in the Middle East. From May
2000 to July 2005, Mr. Sherman served as director of marketing for ZAFF
International Ltd. a Saudi Arabian technology company. During his career, Mr.
Sherman also served as a director of two public companies. He was a member of
the founding team of Taser International, Inc. and served on its board from 1993
to 1999. He also served as executive vice president and director of Ronco, Inc.
from 1981 to 1989. Mr. Sherman received a B.S. degree in business administration
from the University of Miami.





Martin G.
Chilek joined the Company as Vice President, CFO, Treasurer and Assistant
Secretary in January 2004. He was promoted to Senior Vice President and elected
Secretary in March 2006. Prior to joining the Company, Mr. Chilek was an
independent consultant providing transitional management, strategic planning and
financial management services to private and public companies. Mr. Chilek also
served as a general partner of the Edison Venture Fund from 1992 to 1995.
Employed for over 12 years by Humana Inc., a publicly traded healthcare company,
he served in several positions of increasing responsibility, including director
of acquisitions and corporate development and the director of Humana Venture
Capital, the company’s equity investment subsidiary. He earned an AB degree from
Lafayette College and a master’s degree in business and healthcare
administration from Duke University.





AUDIT
COMMITTEE




Our board
of directors currently serves as our audit committee. The audit committee is
responsible for recommending independent auditors and reviewing management
actions in matters relating to audit functions. The committee reviews, with
independent auditors, the scope and results of its audit engagement, the system
of internal controls and procedures and reviews the effectiveness of procedures
intended to prevent violations of laws.




The audit
committee, consistent with the Sarbanes-Oxley Act of 2002 and the rules adopted
thereunder, meets with management and the auditors prior to filing of officers’
certifications with the SEC to receive information concerning, among other
things, significant deficiencies in the design or operation of internal
controls.


45


CODE OF
CONDUCT





We have a
corporate code of conduct and a corporate disclosure policy in place, which
provide for internal procedures concerning the reporting and disclosure of
corporate matters that are material to our business and to our stockholders. Our
corporate code of conduct includes a code of ethics for our officers and
employees as to workplace conduct, dealings with customers, compliance with
laws, improper payments, conflicts of interest, insider trading, company
confidential information, and behavior with honesty and integrity. Our corporate
disclosure policy includes guidelines for publicly disseminating financial and
other material developments to the investing public. A copy of this code of
conduct is published on our website www.deltamutual.com. We intend to disclose
any future amendments to, or waivers from, certain provisions of our Code of
Conduct on this website within five business days following the date of such
amendment or waiver.




COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934





We
believe that during 2008, all of our officers and directors complied with the
reporting requirements of Section 16(a), except as follows. During 2008, James
L. Wientraub, prior to his resignation as a director, failed to file Form 3
Initial Statement of Beneficial Ownership within 10 days of his appointment as a
director on January 28, 2008. Mr. Wientraub filed such Form 3 on March 11,
2008.




In 2008,
prior to his being appointed an officer and director on January 20, 2009, Daniel
R. Peralta, who together with his wife Laura M. Gallo, controls Egani, Inc., the
owner of in excess of 10% of our common stock, failed to file Form 3 Initial
Statements of Beneficial Ownership within 10 days of acquisition of such shares
on March 4, 2008.  Such Form 3’s were filed on July 28, 2008 by Laura
M. Gallo and on July 29, 2008 by Daniel R. Peralta.




Item
11. Executive Compensation.




Compensation
paid by the Company and its subsidiaries to the Company’s Executive Officers
(the “Named Executives”).





SUMMARY
COMPENSATION TABLE





Name and
                                                  Principal
                                                  Position
                                                
                                                Year
                                                
                                                Salary
                                                  ($)
                                                
                                                Bonus
                                                  ($)
                                                
                                                Stock
                                                  Awards
                                                  ($)
                                                
                                                Option
                                                  Awards
                                                  ($)
                                                
                                                Non-Equity
                                                  Incentive
                                                  Plan
                                                  Compensation
                                                  ($)
                                                
                                                Change in
                                                  Pension
                                                  Value and
                                                  Nonquali-
                                                  fied Deferred
                                                  Compensation
                                                  Earnings
                                                  ($)
                                                
                                                
                                                All
                                                  Other
                                                  Compen-
                                                  sation
                                                
                                                Total
                                                  ($)Peter
      F. Russo,  President and CEO (1)
                                                
                                                2008
                                                
                                                $
                                                8,125
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                8,125Peter
      F.
                                                  Russo,
      President and CEO
                                                
                                                2007
                                                
                                                $
                                                97,500
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                97,500Martin
      G. Chilek, Chief Financial Officer
                                                
                                                2008
                                                
                                                $
                                                39,704
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                39,704Martin
      G. Chilek, Chief Financial Officer
                                                
                                                2007
                                                
                                                $
                                                91,000
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                91,000Malcolm
      W. Sherman, Executive Vice President (2)
                                                
                                                2008
                                                
                                                $
                                                -0-
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                $
                                                -0-


46





(1)
            Mr.
      Russo resigned as President and a director effective July 25, 2008.While
      he served as a director of the Company he received no additional
      compensation for serving in that
capacity.





(2)
            Mr.
      Sherman served without compensation as an executive officer and director
      of the Company in 2008.





EXECUTIVE
COMPENSATION NARRATIVE





Peter F. Russo, the Company’s former
president and CEO, resigned effective July 25, 2008.In conjunction with
his resignation, Mr. Russo agreed to waive all of his accrued salary for the
period prior to July 2004 in exchange for a cash payment from a
stockholder.





On May
23, 2005, we entered into an executive employment agreement with Mr. Chilek.
This agreement was effective June 1, 2005, for an initial term of three years,
and the term is automatically extended for additional one year periods if
neither party gives notice of termination at least 90 days prior to the end of
the initial term or any current additional one year term. The agreement provides
for a base salary of $132,000 per year, but until the Board of Directors
determines that the financial condition of the Company permits the payment of
that salary, the minimum salary to be paid to Mr. Chilek is $6,000 per month. In
July 2006, Mr. Chilek’s minimum monthly salary was increased to $7,500. The
agreement contains provisions for discharge for "cause", including disability,
in which cases no further compensation or benefits would be payable under the
agreement. If a termination is other than for death or "cause", or the Company
elects not to renew the agreement, the base salary is continued for six months
following the termination of employment, or up to the time Mr. Chilek commences
other full time employment. The agreement also contains a provision for
additional compensation to Mr. Chilek if his employment is terminated without
“cause” due


to a
change in control.





Any
compensation arrangements to which Dr. Peralta and Mr. Sherman may be parties in
their capacity as executive officers of the Company have not yet been
established by the Board of Directors.


47


OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END





The
following table sets forth information as of the end of the Company’s last
fiscal year concerning option and stock awards to the Company’s Named
Executives.








Option Awards
                                    
                                    Stock AwardsName
                                    
                                    Number of
                                      Securities
                                      Underlying
                                      Unexercised
                                      Options
                                      (#)
                                      Exercisable
                                    
                                    
                                    Number of
                                      Securities
                                      Underlying
                                      Unexercised
                                      Options
                                      (#)
                                      Unexercisable
                                    
                                    
                                    Equity
                                      Incentive
                                      Plan
                                      Awards:
                                      Number of
                                      Securities
                                      Underlying
                                      Unexercised
                                      Unearned
                                      Options
                                      (#)
                                    
                                    
                                    Option
                                      Exercise
                                      Price
                                      ($)
                                    
                                    Option
                                      Expiration
                                      Date
                                    
                                    Number
                                      of
                                      Shares
                                      or Units
                                      of
                                      Stock
                                      That
                                      Have
                                      Not
                                      Vested
                                      (#)
                                    
                                    Market
                                      Value
                                      of
                                      Shares
                                      or
                                      Units
                                      of
                                      Stock
                                      That
                                      Have
                                      Not
                                      Vested
                                      ($)
                                    
                                    Equity
                                      Incentive
                                      Plan
                                      Awards:
                                      Number
                                      of
                                      Unearned
                                      Shares,
                                      Units or
                                      Other
                                      Rights
                                      That
                                      Have Not
                                      Vested
                                      (#)
                                    
                                    Equity
                                      Incentive
                                      Plan
                                      Awards:
                                      Market
                                      or Payout
                                      Value of
                                      Unearned
                                      Shares,
                                      Units or
                                      Other
                                      Rights
                                      That
                                      Have Not
                                      Vested
                                      ($)Martin
      G. Chilek
                                    
                                    
                                    2,000,000
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    $
                                    0.11
                                    
                                    July
      2011





DIRECTORS'
COMPENSATION





We do not
compensate directors in their capacity as such nor do we compensate our
directors for attendance at meetings. We do reimburse our officers and directors
for reasonable expenses incurred in the performance of their
duties.





COMPENSATION
PLANS





STOCK
OPTION PLAN





In August 2004, our stockholders
approved the 2004 Stock Option Plan (the "2004 Plan"), pursuant to which
10,000,000 shares of common stock were reserved for issuance. As of December 31,
2008, 6,500,000 shares were available for the grant of options under the 2004
Plan.




The 2004
Plan authorizes the Board of Directors (the "Board"), or a committee comprised
of non-employee directors ("Committee"), to grant, over a 10-year period,
options to purchase up to 10,000,000 shares of the Company's common stock.
Persons eligible to receive options under the Plan include key employees and
directors who are also employees of the Company or any subsidiary, and
consultants to the Company or any subsidiary, as determined by the Board or
Committee. The persons to be granted options under the Plan and the number and
purchase price of the shares represented by each option, the time or times at
which the options may




be
exercised, and the terms and provisions of each option (which need not be
uniform for all options) will be determined by the Board or Committee. The
purchase price per share may not be less than 100% of the fair market value of
the Company's stock at the time of grant. The purchase price may be paid in cash
or common stock of the Company held for at least six months with a market value
equal to that of the shares being acquired or, in the discretion of the board or
committee, any combination of these. Options granted under the Plan may be in
the form of "incentive stock options" which qualify as such under Section 422 of
the Internal Revenue Code or non-qualified stock options which do not meet the
criteria for incentive stock options under Section 422. The tax treatment
afforded stock options qualifying as incentive stock options is generally more
favorable to employees than that afforded to non-qualified stock options, in
that the exercise of an incentive stock option does not require the optionee to
recognize income for federal income tax purposes at the time of exercise. (The
difference between the exercise price of the incentive stock option and the fair
market value of the stock at the time of purchase is, however, an item of tax
preference which may require payment of an alternative minimum
tax.)


48


Options
granted under the Plan are, generally, transferable only by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
optionee only by the optionee or by his legal representative in the event of his
disability. In its sole discretion, however, the Board or Committee may permit
an optionee to make certain transfers of non-qualified stock options, provided
that the transfers are to "family members" and are not for value, as defined in
the General Instructions to Form S-8 under the Securities Act of
1933.





The term
of each option cannot be more than 10 years from the date of grant, and options
can be exercised only during the participant's employment with the Company or
one of its subsidiaries. If any option expires or is terminated prior to its
exercise in full and prior to the termination of the Plan, the shares subject to
such unexercised option will be available for the grant of new options under the
Plan. Further, any shares used as full or partial payment by an optionee upon
exercise of an option may subsequently be used by the Company to satisfy other
options granted under the Plan, subject to the limitation on the total number of
shares authorized to be issued under the Plan.





The Plan
permits an outstanding option to be exercised after termination of employment
only to the extent that the option was exercisable on the date of termination
but in no event beyond the original term of the option (i) within one year by
the estate or rightful heir(s) of the optionee if the optionee's employment is
terminated due to the optionee's death; (ii) within one year after the date of
such termination if the termination is due to the optionee's Disability (as
defined in the Plan); or (iii) within three months after the date of such
termination if the termination was due to the optionee's Retirement (as defined
in the Plan) or was for reasons other than death or Disability and other than
"for cause" (as defined in the Plan). Upon termination of an optionee's
employment "for cause," any unexercised options held by the optionee will be
forfeited.





Unexercised
options will terminate in the event of the Company's dissolution, liquidation,
or sale of all or substantially all of its assets. In the event of our merger
with another corporation, the option would be assumed or an equivalent option
substituted by the successor corporation or, if such successor corporation does
not agree to assume the option or substitute an equivalent option, the Board can
provide for the option holder to have the right to exercise the option as to all
of the optioned shares, including shares as to which the option would not
otherwise be exercisable. The number of shares subject to options and the option
prices will be appropriately adjusted in the event of changes in our outstanding
common stock by reason of stock dividends, recapitalizations, mergers,
consolidations, stock splits and combinations of shares, and the like. The Board
may at any time terminate or modify the Plan except, that without further
approval of the stockholders, the Board may not make any changes to the Plan
which would materially increase the number of shares that may be issued under
the Plan, materially modify the eligibility requirements for participation in
the Plan, or require stockholder approval under the Delaware General Corporation
Law, the Exchange Act, or the Internal Revenue Code.





The 2004
Plan gives the Board the power to issue a restricted stock award to an employee
representing shares of common stock that are issued subject to such restrictions
on transfer and other incidents of ownership and such forfeiture conditions as
the Board may determine ("Restricted Shares"). In connection with issuance of
any Restricted Shares, the Board may (but shall not be obligated to) require the
payment of a specified purchase price (which price may be less than Fair Market
Value as defined in the Plan).





OTHER
PLANS





We have
not adopted any other deferred compensation, pension, profit sharing, stock
option plan or programs for the benefit of our officers or employees. During
2008, the Company suspended the health and dental insurance benefit plans that
were available to all full time employees.


49




Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.





The
following table sets forth information, as of April 6, 2009, with respect to the
beneficial ownership of the Company's Common Stock by each person known by the
Company to be the beneficial owner of more than five percent (5%) of the
outstanding Common Stock and by directors and officers of the Company, both
individually and as a group:





Name
      and Address of Beneficial Owner
                
                Number
      of Shares Owned
                
                
                Percentage**BeneficiallyDaniel
      R. Peralta (1)
                
                
                132,691,000
                
                
                
                59.81
                %Malcolm
      W. Sherman (2)
                
                
                10,000,000
                
                
                
                4.51
                %Martin
      G. Chilek (3)
                
                
                2,050,000
                
                
                
                0.92
                %All
      Officers and Directors as a Group
                
                
                144,741,000
                
                
                
                65.24
                %





** Based
on 221,849,158 shares outstanding on April 6, 2009.





(1) In
addition to 2,691,000 shares owned directly, Dr. Peralta is the beneficial owner
of 130,000,000
shares owned directly by Egani, Inc., which is owned by Daniel R. Peralta and
Laura Monica Gallo, husband and wife, each of whom owns 50% of the outstanding
equity interests of Egani, Inc. Dr. Peralta is the President and controls the
operations of Egani, Inc. The address of Egani, Inc. is 8260 East Raintree
Drive, Scottsdale, AZ 85206. 1,577,150 shares of common stock are owned directly
by Dr. Peralta’s son, Santiago Peralta. Dr. Peralta disclaims beneficial
ownership of the shares held by his son. Dr. Peralta’s address is c/o Delta
Mutual, Inc., 14301 North 87th Street,
#310, Scottsdale, AZ 85260.





(2) Mr.
Sherman owns beneficially 10,000,000 shares owned by Security Systems
International, Inc. of which Mr. Sherman is the president and a director and the
majority stockholder. The address of Security Systems International, Inc. is
9034 East Caribbean Lane, Scottsdale, AZ 85260. Mr. Sherman’s address is c/o
Delta Mutual, Inc. 14301 North 87th Street,
#310, Scottsdale, AZ 85260.





(3) In
addition to 50,000 shares owned beneficially, Mr. Chilek holds options expiring
July 3, 2011 to purchase an aggregate of 2,000,000 shares of common stock at an
exercise price of $0.11 per share. Mr. Chilek’s address is c/o Delta Mutual,
Inc., 14301 North 87th Street,
#310, Scottsdale, AZ 85260.




Item 13. Certain Relationships and
Related Transactions, and DirectorIndependence.





Effective
March 4, 2008, we entered into a Membership Interest Purchase Agreement (the
“Agreement”) with Egani, Inc., an Arizona corporation, (“Egani”), providing for
the acquisition by the Company from Egani 100% of the shares of stock held by it
in Altony SA, an Uruguay Sociedad Anonima (“Altony”), which owns 100% of the
issued and outstanding membership interests in South American Hedge Fund LLC, a
Delaware limited liability company (“SAHF”). In connection with the Agreement,
we issued 130,000,000 shares of our common stock to Egani, and also issued
10,000,000 shares to Security Systems International, Inc.(“SSI”), owned by
Malcolm Sherman, our Executive Vice President and director, pursuant to a
Consulting Services Agreement, dated September 10, 2007, between the Company and
SSI. At the Closing of the purchase of all of the shares of stock of
Altony on March 4, 2008, we issued to Egani 130,000,000 shares of our
common stock, which constitutes following such issuance a majority of our
outstanding shares of common stock. The stockholders of Egani are Daniel R.
Peralta and Monica Laura Gallo, husband and wife, each a beneficial owner of
65,000,000 million shares of our common stock. The consideration furnished by
Egani was comprised of all of the outstanding shares of stock of Altony SA and
100% of the membership interests in South American Hedge Fund LLC, valued at
$2,600,000 based on the market value of 130,000,000 shares of our common stock
on March 4, 2008, that we issued to acquire these assets. The sources of funds
used by the beneficial owners of Egani to acquire control of the Company were
personal funds.


50


During
2008, Egani made loans to the Company as set forth below:





Date of Note
                  
                  Principal
                    Amount
                  
                  
                  Interest
                    Rate
                  
                  Maturity DateMarch
      6, 2008
                  
                  $
                  21,000
                  
                  
                  
                  6
                  %
                  April
      16, 2009April
      28, 2008
                  
                  
                  9,550
                  
                  
                  
                  6
                  %
                  April
      16, 2009September
      18, 2008
                  
                  
                  13,350
                  
                  
                  
                  6
                  %
                  April
      16, 2009Total
                  
                  $
                  43,900





On
October 3 and November 20, 2008, the Company issued to Santiago Peralta, the son
of Daniel Peralta, demand 6% promissory notes in the respective principal
amounts of $10,000 and $14,000, representing amounts loaned to the Company by
Mr. Peralta on these dates.





During
2008, SSI made loans to the Company as set forth in the table
below:





Date of Note
                  
                  Principal Amount
                  
                  
                  Interest Rate
                  
                  Maturity DateMarch
      6, 2008
                  
                  $
                  100,000
                  
                  
                  
                  6
                  %
                  April
      17, 2009April
      15, 2008
                  
                  
                  20,000
                  
                  
                  
                  6
                  %
                  April
      17, 2009May
      14, 2008
                  
                  
                  16,900
                  
                  
                  
                  6
                  %
                  April
      17, 2009July
      7, 2008
                  
                  
                  22,413
                  
                  
                  
                  6
                  %
                  On
      DemandSeptember
      19, 2008
                  
                  
                  16,650
                  
                  
                  
                  6
                  %
                  On
      DemandOctober
      22, 2008
                  
                  
                  28,500
                  
                  
                  
                  6
                  %
                  On
      DemandDecember
      15, 2008
                  
                  
                  8,190
                  
                  
                  
                  6
                  %
                  On
      DemandTotal
                  
                  $
                  212,653




Item
14.  Principal Accountant Fees and Services




(1)
Aggregate fees for the last two years:





2008
                              
                              
                              2007$
                              37,240
                              
                              
                              $
                              41,071(2)
      Audit related fees:
                              
                              2008
                              
                              
                              2007$
                              37,240
                              
                              
                              $
                              41,071(3)
      Tax fees:2008
                              
                              
                              2007$
                              -0-
                              
                              
                              $
                              -0-(4)
      All other fees: NA





(5) Audit
committee pre-approval processes, percentages of services approved by audit
committee, percentage of hours spent on audit engagement by persons other than
principal accountant's full time employees: NA




51




Item
15. Exhibits and Financial Statement Schedules.




(a)(3)
Exhibits





Exhibit
      No.
                  
                  Description
      of Exhibits3.1
                  
                  Articles
      of Incorporation of the Company, as currently in  effect,
      incorporated herein by reference to Exhibit 3.1 to  Amendment
      No. 1 to the Company's Registration Statement on Form 10-SB filed with the
      Commission on June 15, 2000.3.1a
                  
                  Amendment
      to Certificate of Incorporation, filed September 1,  2004.
      Incorporated herein by reference to Exhibit 3.1a to
      the  Company's Current Report on Form 8-K, filed with
      the   Commission on September 3, 2004.3.1b
                  
                  Form
      of Restatement of Certificate of Incorporation of Delta  Mutual,
      Inc., as amended. Incorporated herein by reference to  Exhibit
      3.1b to the Company's Quarterly Report on Form 10-QSB,  filed
      with the Commission on November 15, 2004.3.2
                  
                  By-Laws
      of the Company. Incorporated herein by reference to  Exhibit 3.2
      to Amendment No. 1 to the Company's Registration  Statement on
      Form 10-SB filed with the Commission on June
      15,  2000.3.2a
                  
                  Amendment
      to Article III, Section I of the By-Laws.  Incorporated herein
      by reference to the Company's quarterly  report on Form 10-QSB,
      filed with the Commission on November  21,
  2000.3.1c
                  
                  Certificate
      of Amendment to Certificate of Incorporation,   filed June
      26,2007. Incorporated herein by reference to, Exhibit 3.1c to the
      Company's quarterly report on Form 10-QSB, filed with the Commission on
      August 10, 2007.3.1d
                  
                  Form
      of Restatement of Certificate of Incorporation of Delta  Mutual,
      Inc., as amended. Incorporated herein by reference to Exhibit 3.1d to the
      Company's quarterly report on Form 10-QSB, filed with the Commission on
      August 10, 2007.4.2a
                  
                  Delta
      Mutual, Inc. 2004 Stock Option Plan. Incorporated herein  by
      reference to Exhibit B to the Company's Definitive
      Proxy  Statement, filed with the Commission on June 16,
      2004.4.6
                  
                  4%
      Convertible Promissory Note of the Company due May 2006  issued
      in the principal amount of $193,740 on May 12, 2004.Incorporated
      herein by reference to Exhibit 4.6 to the Company's Quarterly Report on
      Form 10-QSB, filed with the Commission on November 15,
    2004.4.6a
                  
                  Amendment,
      dated as of May 2, 2006, to 4% Convertible Promissory Note in the
      principal amount of $193,740.Incorporated
      herein by reference to Exhibit 4.6a to the Company’s Annual Report on Form
      10-KSB, filed with the Commission on April 2, 2007.4.6b
                  
                  Amendment,
      dated as of July 6, 2006, to 4% Convertible Promissory Note in the
      principal amount of $193,740.Incorporated
      herein by reference to Exhibit 4.6b to the Company’s Annual Report on Form
      10-KSB, filed with the Commission on April 2, 2007.4.6c
                  
                  Amendment,
      dated as of September 8, 2006, to 4% Convertible Promissory Note in the
      principal amount of $193,740.Incorporated
      herein by reference to Exhibit 4.6c to the Company’s Annual Report on Form
      10-KSB, filed with the Commission on April 2,
  2007.


52





4.6d
              
              Amendment,
      dated as of November 21, 2006, to 4% Convertible Promissory
      Note in the principal amount of $193,740. Incorporated
      herein by reference to Exhibit 4.6d to the Company’s Annual Report on Form
      10-KSB, filed with the Commission on April 2,
      2007.4.6e
              
              Amendment,
      dated April 4, 2007, to 4% Convertible Promissory Note in the Principal
      Amount of $193,740. Incorporated herein by reference to Exhibit 4.6e to
      the Company's quarterly report on Form 10-QSB, filed with the Commission
      on August 10, 2007.4.6f
              
              Amendment,
      dated September 7, 2007 to Convertible Promissory Note in the principal
      amount of $193,740. Incorporated herein by reference to Exhibit 4.6f to
      the Company's quarterly report on Form 10-QSB, filed with the Commission
      on November 9, 2007.10.16
              
              Agreement,
      dated January 14, 2004, by and between Delta   Mutual, Inc.
      and Hi-Tech Consulting and Construction, Inc. Incorporated herein by
      reference to Exhibit 10.16 to the Company's Annual Report on Form 10-KSB,
      filed with the Commission on April 6,
2004.


53





10.26
              
              Executive
      Employment Agreement, dated May 23, 2005, between   Delta
      Mutual, Inc. and Martin G. Chilek. Incorporated herein by reference to
      Exhibit 10.26 to the Company's Current  Report on Form 8-K,
      filed with the Commission on May 25, 2005.10.33e
              
              Form
      of Amended and Restated 8% Term Notes issued March 6, 2008  by
      Delta  Mutual, Inc. in the aggregate principal amount of
      $150,655. Incorporated herein by reference to Exhibit 10.33e to the
      Company’s Annual Report on Form 10-KSB, filed with the Commission on April
      15, 2008.10.35
              
              Membership
      Interest Purchase Agreement, dated March 4, 2008,   between
      Delta Mutual, Inc. and Egani, Inc. Incorporated hereinby reference to Exhibit 10.35 to
      the Company’s Current Report   on Form 8-K, filed with the
      Commission on March 11, 2008.10.36
              
              Consulting
      Services Agreement, dated September 10, 2007,  between Delta
      Mutual, Inc. and Security Systems International, Inc. Incorporated herein by
      reference to Exhibit 10.36 to the Company’s Current Report on Form 8-K,
      filed with the Commission on March 11, 2008.10.37
              
              Form
      of 6% promissory notes issued March 6, 2008 by the Company in the
      aggregate principal amount of $121,000. Incorporated herein by reference
      to Exhibit 10.37 to the Company’s Current Report on Form 8-K, filed with
      the Commission on March 11, 2008.10.37a
              
              Amendment,
      dated as of September 2, 2008, to 6% Promissory Note   in
      the principal amount of $21,000. Incorporated herein
      by   reference to Exhibit 10.37a to the Company’s Quarterly
      Report on Form 10-Q, filed with the Commission on November 18,
      2008.10.37b
              
              Amendment,
      dated as of September 18, 2008, to 6% Promissory  Note in the
      principal amount of $100,000. Incorporated herein by reference to Exhibit
      10.37b to the Company’s Quarterly Report on Form 10-Q, filed with the
      Commission on November 18,   2008.10.38
              
              6%
      Promissory Note of the Company issued in the principal amount of $20,000
      on April 15, 2008. Incorporated herein by reference to Exhibit 10.38 to
      the Company’s Quarterly Report on Form 10-Q, filed with the Commission on
      July 3, 2008.10.38a
              
              Amendment,
      dated as of October 8, 2008, to 6% Promissory  Note in the
      principal amount of $20,000. Incorporated herein by reference to Exhibit
      10.38a to the Company’s Quarterly Report on Form 10-Q, filed with the
      Commission on November 18,   2008.10.39
              
              6%
      Promissory Note of the Company issued in the principal amount of $9,550 on
      April 28, 2008. Incorporated herein by reference to Exhibit 10.39 to the
      Company’s Quarterly Report on Form 10-Q, filed with the Commission on July
      3, 2008.10.39a
              
              Amendment,
      dated as of October 10, 2008, to 6% Promissory  Note in the
      principal amount of $9,550. Incorporated herein by reference to Exhibit
      10.39a to the Company’s Quarterly Report on Form 10-Q, filed with the
      Commission on November 18,   2008.10.40
              
              6 %
      Promissory Note of the Company issued in the principal  amount
      of $16,900 on May 14, 2008. Incorporated herein by reference to Exhibit
      10.40 to the Company’s Quarterly Report on Form 10-Q, filed with the
      Commission on July 3, 2008.10.40a
              
              Amendment,
      dated as of November 4, 2008, to 6% Promissory Note in the principal
      amount of $16,900. Incorporated herein by reference to Exhibit 10.40a to
      the Company’s Quarterly Report on Form 10-Q, filed with the Commission on
      November
18,   2008.


54





10.42
              
              6%
      Promissory Note of the Company issued in the
      principal   amount of $22,413 on July 7, 2008. Incorporated
      herein by reference to Exhibit 10.42 to the Company’s Quarterly Report on
      Form 10-Q, filed with the Commission on November
      18,   2008.10.43
              
              6%
      Promissory Note of the Company issued in the
      principal   amount of $13,350 on September 18,2008.
      Incorporated herein by reference to Exhibit 10.43 to the Company’s
      Quarterly Report on Form 10-Q, filed with the Commission on November
      18,   2008.10.44
              
              6%
      Promissory Note of the Company issued in the
      principal   amount of $16,650 on September 19,2008.
      Incorporated herein by reference to Exhibit 10.44 to the Company’s
      Quarterly Report on Form 10-Q, filed with the Commission on November
      18,   2008.10.45
              
              6%
      Promissory Note of the Company issued in the
      principal   amount of $10,000 on October 3, 2008.
      Incorporated herein by reference to Exhibit 10.45 to the Company’s
      Quarterly Report on Form 10-Q, filed with the Commission on November
      18,   2008.10.46
              
              6%
      Promissory Note of the Company issued in the
      principal   amount of $28,500 on October 22, 2008.
      Incorporated herein by reference to Exhibit 10.46 to the Company’s
      Quarterly Report on Form 10-Q, filed with the Commission on November
      18,   2008.10.47
              
              6%
      Promissory Note dated as of November 20, 2008 by Delta  Mutual,
      Inc. to Santiago Peralta in the principal amount of  $14,000,
      filed herewith.10.48
              
              Amendment
      dated as of November 24, 2008 to 6% promissory notes issued to Egani, Inc.
      in the aggregate principal amount of $43,900, filed
    herewith.10.49
              
              Amendment
      dated as of December 14, 2008 t 6% promissory notes issued to Security
      Systems International, Inc. in the aggregate principal amount of $136,900,
      filed herewith.10.50
              
              6%
      Promissory Note dated as of December 15, 2008 to Security Systems
      International, Inc. in the principal amount of $8,190, filed
      herewith.10.51
              
              6%
      Promissory Note dated as of January 22, 2009 to Security Systems
      International, Inc. in the principal amount of $7,686, filed
      herewith.10.52
              
              6%
      Promissory Note dated as of February 10, 2009 to Security Systems
      International, Inc. in the principal amount of $15,950, filed
      herewith.10.53
              
              6%
      Promissory Note dated as of February 18, 2009 to Security Systems
      International, Inc. in the principal amount of $5,000, filed
      herewith.10.54
              
              6%
      Promissory Note dated as of February 19, 2009 to Malcolm W. Sherman in the
      principal amount of $5,000, filed herewith.10.55
              
              6%
      Promissory Note dated as of March 20, 2009 to Security Systems
      International, Inc. in the principal amount of $19,767, filed
      herewith.10.56
              
              6%
      Promissory Note dated as of March 25, 2009 to Security Systems
      International, LLC in the principal amount of $8,577, filed
      herewith.10.57
              
              6%
      Promissory Note dated as of April 2, 2009 to Security Systems
      International, LLC in the principal amount of $14,987, filed
      herewith.


55





14.
              
              Delta
      Mutual, Inc. Code of Conduct and Business Ethics.  Incorporated
      herein by reference to Exhibit 10.25 to the  Company’s Annual
      Report on Form 10-KSB, filed with the Commission on April 14,
      2005.31.1
              
              Certification
      of Chief Executive Officer Pursuant to Section  302 of the
      Sarbanes-Oxley Act of 2002, filed herewith.31.2
              
              Certification
      of Chief Financial Officer Pursuant to Section  302 of the
      Sarbanes-Oxley Act of 2002, filed herewith.32.1
              
              Certification
      of Chief Executive Officer Pursuant to 18 U.S.C.  Section 1350,
      as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of
      2002, filed herewith.32.2
              
              Certification
      of Chief Financial Officer Pursuant to 18 U.S.C.  Section 1350,
      as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of
      2002, filed herewith.


56


SIGNATURES


In
accordance with Section 13 or 15(d) of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.





DELTA
      MUTUAL, INC.Dated:
      April 14, 2009By:/s/ Daniel R. PeraltaDaniel
      R. PeraltaPresident,
      Chief Executive Officer and DirectorBy:/s/ Martin G. ChilekMartin
      G. ChilekSenior
      Vice President and Chief Financial OfficerPrincipal
      Financial Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Registrant in the
capacities indicated, on April 14, 2009.





/s/ Daniel R. PeraltaDaniel
      R. Peralta, President, Chief Executive Officer and
  Director/s/ Malcolm W. ShermanMalcolm
      W. ShermanExecutive
      Vice President and
Director


57